Investors have increased interest in the London Southbank office market, after the completion of the Shard brought a sharp rise in available space, culminating in the area achieving the capital's second highest total returns in 2012 at 9.6%.
Returns for offices on the Southbank were second only to the West End at 10.6%, according to the annual IPD/Farebrother report, which summarises the performance of investment in London offices.
A shift in focus was brought on by occupiers starting to look south of the river for better value space and increased availability has seen income returns of 5.4%; 100 basis points higher than the central London office market average
Greg Mansell, head of research at IPD said: "While prime London yields remain compressed, there has been increasing interest amongst investors for assets outside of the core markets. While focus will be drawn to The Shard when thinking of the Southbank, which stretches all the way from Tower Bridge to Waterloo, there are assets that offer a high income premium, while still benefiting from London’s stability."
Completion of The Shard and Old Valentine Place were key to the Southbank’s performance, according to Julian Hind, Farebrother’s head of office and residential letting.
He said: "The Shard and its letting performance continue to dominate office availability in the Southbank market – the largest change in stock since the completions on the More London campus."
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