As the dust settles on the final quarter of 2023, many areas of the market saw increased activity that is continuing into 2024, and that is reflected in the biggest deals recognised by the latest quarterly CoStar Awards.

Even London's beleaguered office market saw green shoots. Knight Frank reports take-up in the capital came in at 10.7 million square feet over 2023 against a long-term average of 12 million square feet. But that total masks a strong end to the year with 3.9 million square feet of leasing transactions, the largest quarterly take-up volume for five years.

Knight Frank says office requirements are at a 10-year high too, on a clear increase in corporate office space searches.

A recent pick-up in lettings in the industrial market, particularly for big-box facilities, means business is likely to improve after a year when there was a fall to 29 million square feet of take-up, according to Savills, still 12% above pre-pandemic averages. DTRE's research is already tracking 8.2 million square feet of industrial space under offer this year and it predicts the supermarket giants Tesco, Sainsbury’s and Marks & Spencer are all preparing to do big-box deals.

That's not to say that the UK's interest rate environment, the highest for 15 years, is not continuing to drag on investment activity. Carter Jonas reports £7.4 billion of commercial property was traded in the UK in the final quarter, down 9% quarter-on-quarter and 46% below the five-year quarterly average. Carter Jonas said that was the weakest quarter for investment for more than a decade.

A bright spot has been the so-called alternative property sector. Spending on hotels and student homes in particular lifted in the final quarter with nearly £3 billion spent, Carter Jonas reports.

The robust occupier story and consensus that interest rate rises are at an end ought to lead to a more buoyant property market in the coming months, and, in turn, even more potential winners of CoStar's agency awards.

UBS Bets on London Offices

Swiss bank UBS's real estate investment arm completed two large office transactions in the final quarter, a welcome show of confidence in the capital.

The biggest, and CoStar's top sale, was the purchase of the London headquarters of Snap from HB Reavis for £230 million.

The 142,000-square-foot Bloom development in Farringdon has been a major success story for the central European developer as it has expanded into London. The building includes ground-floor shops with the majority of the offices leased to Snap, the developers of popular photo messaging app Snapchat.

That occupier commitment has been crucial. Snap signed a deal to more than double its office footprint in London by taking close to 115,000 square feet at Bloom in 2021. It then leased a further 12,000 square feet recently.

TT&G advised UBS. Savills advised HB Reavis.

HSBC's City Switch Was a Landmark in More Ways than One

HSBC's move to new London headquarters was one of those much-talked-about landmark deals that the market needed to finally happen.

It announced plans to relocate from the more than 1 million square foot it had occupied in Canary Wharf for more than two decades to 556,000 square feet at the former British Telecom head office in the City of London.

The relocation, expected to take place in 2027, is a major reduction in space, but it is still the largest office move in London for six years. At a blended rent of around £87 per square feet, it showed occupiers are moving again in the capital after the pandemic paralysed decision-making. It also suggests they are prepared to pay handsomely for the best space.

CoStar's data finds a strong end to the year meant London office take-up rose 4% year-over-year to nearly 18 million square feet in 2023, a four-year high, though still below the annual average of just over 20 million square feet in the five years preceding the pandemic.

HSBC's new home at 81 Newgate Street in St Paul’s is being redeveloped by Orion Capital Managers and Pella Real Estate Partners as Panorama St Paul's.

CBRE and Cushman & Wakefield are letting agents. Cushman & Wakefield advised HSBC.

All Aboard Prologis's Railport

Take-up of industrial space in the UK was only a disappointment in 2023 in the context of the rampant market during the pandemic, propelled by consumers' online purchasing. In fact, take-up returned to the pretty impressive levels seen in the run-up to the pandemic. CoStar News is already reporting on a string of major transactions in 2024 that suggest things are picking up again, not least Amazon buying land from Segro for a 2 million-square-foot hub.

The fourth quarter of 2023 may not have seen anything quite like that but perennial dealmaker Prologis remained busy, securing the quarter's largest deal, the signing of Lloyd Fraser Group for Units A, B and C of Campus 450 @ DIRFT totalling 439,363 square feet of space at its Northamptonshire rail freight terminal.

Lloyd Fraser Group is a national third-party logistics provider that works closely with the dairy and fashion industries and already occupies another major Golden Triangle site in Lutterworth. The properties are being occupied on a 10-year lease at a starting rent of £8.25 per square feet.

DTRE, Lambert Smith Hampton and Knight Frank represented Prologis.

Sovereign Centros Finds Success Repositioning West Midlands Mall

Sovereign Centros, the asset manager bought by the real estate services giant CBRE at the end of last year, has been enjoying plenty of success repositioning and leasing up the 1.5 million-square-foot Merry Hill shopping centre in Dudley.

Acting on behalf of the bondholder owners of the UK's eighth-largest shopping centre, it signed fitness operator Xtrafit for the 40,000 square feet first floor of the former Debenhams at the mall. By January 2024 it had signed Australian lifestyle, technology and entertainment retailer Harvey Norman for another 57,000-square-foot slice of the former anchor department store. There is 25,000 square feet remaining, and that is under offer to an undisclosed tenant.

Time Retail Partners and JLL represented Sovereign Centros acting for the bondholder owners of Merry Hill. Leisure Division Property Consult represented the tenant.