There are sound reasons to feel more positive about the prospects for UK commercial real estate in the second half of 2024, but that is yet to translate into dealmaking. The latest CoStar Awards for the second quarter reflect the challenging market conditions, but nevertheless show major deals pointing to where the bright spots are emerging.
Savills is predicting that when the dust has settled, there will have been a very quiet £5.7 billion of commercial real estate investment in the second quarter, down from the already disappointing circa £10 billion in the first quarter. At the same time it reports that in June improving market confidence was leading to prices rising, with high street retail yields coming in by 25 basis points and four sectors reporting a downward pressure on yields. It says falling debt costs have been a factor alongside improved take up by occupiers.
This is backed up by the performance of some standout sectors. UK hotels, for instance, have powered ahead. Cushman & Wakefield reports that transaction volumes have increased by 210% in the first half of 2024 from the same period last year to hit around £3.9 billion, levels unseen since the first half of 2015.
The revival has been fuelled by several major private equity portfolio deals, Cushman says, something that will continue into the second half.
The occupier story is improving, too, in markets that traditionally point the way for trends. Examples are a clear pick-up in large retail lettings on big streets such as London's Oxford Street, and a return of big-box industrial lettings. Colliers reports that take-up of warehouses of more than 100,000 square feet returned to levels in line with the long-term pre-COVID average of 14 million square feet in its latest analysis for activity between January and June 2024. Take-up for that size reached 13.3 million square feet, up 4.4% year-on-year, across 53 deals with resiliency being created by an increase in "mega-sized deals".
That improving occupier story, aligned with the clarity brought by a new government with a strong majority and the likelihood of an interest rates cut in the next two months, suggests there could be an increased number of deals fighting for supremacy in next quarter's CoStar Agency Awards.
Top Sale
Blackstone's Blockbuster Acquisition Underlines Bond Street's Enduring Global Popularity

American private-equity firm Blackstone is no stranger to completing the biggest quarterly real estate investment deal in the UK.
Its purchase of 130-134 New Bond Street, as revealed by CoStar News in March, was market-moving for a number of reasons. No surprise that the acquisition for £226.5 million and a 2.6% net initial yield was one of the hottest pieces of gossip at the Mipim real estate conference in Cannes.
The acquisition from Canada's Oxford Properties and Swiss luxury goods group Richemont means Blackstone takes control of a 27,657-square-foot block on New Bond Street and Grosvenor Street that is home to retailers Breitling, the luxury watch maker, and Smythson, the stationery group. Office tenants include Newmark, APAM and Hilco.
It is clear that Blackstone sees a rare opportunity to create a luxury flagship store on Bond Street. That is a response to more and more luxury retailers moving their flagship stores to the area and investing in their own premises at global prime retail addresses.
Blackstone's acquisition also marked its return to London and retail investment at a time when a strong dollar has encouraged US investors to take their highest share of the market for some time.
JLL advised Oxford Properties and Richemont. Blackstone was advised by Michael Elliott.
Top Office Lease
British Land's letting to US hedge fund Citadel is largest office deal in UK this year

In April, British Land and Singaporean sovereign wealth fund GIC completed an agreement with the rapidly expanding U.S. hedge fund firm Citadel and global market-maker Citadel Securities to lease over 250,000 square feet of workspace, with options to take another 130,000 square feet, at the new 2 Finsbury Avenue development at their Broadgate campus in the City of London. The landmark deal was revealed by CoStar News.
The commitment, the largest office letting in the UK so far this year, is a major boost for London and the new 750,000-square-foot development. It also rewards British Land and GIC's decision to press on with an £1.5 billion investment over 10 years to repurpose Broadgate as a mixed-use development.
Knight Frank has reported recently on London's continual global appeal to what it calls "niche financial sectors", such as hedge funds, saying this group has leased 6.4 million square feet of London office space since 2019, and take-up has increased by 46% among these firms between 2019 and 2023.
JLL advised Citadel. Cushman & Wakefield and JLL advised British Land and GIC.
Top Industrial Lease
Nike Limbers Up for Mega Corby Industrial Letting

In a clear theme this quarter, another American giant in its field is behind the biggest industrial lease. This time, sports retailer Nike signed a 20-year lease agreement for an 1.3 million-square-foot UK logistics campus and national supply chain hub at Magna Park Corby.
The facilities will be housed in one building, targeting a BREEAM Outstanding rating and net zero carbon in construction and it will be Nike's first standalone logistics campus in the UK.
GLP, the global logistics real estate, data centres and renewable energy group, secured the much-sought-after East Midlands requirement, dubbed Project "The Terrace". Legal & General will be the strategic partner on the project.
Savills and M1 are the agents for the scheme. Savills advised Nike.
Top Retail Lease
Zara Fashions Top Retail Deal at Former Glasgow Debenhams

Fashion retailer Zara, and its parent Spanish group Inditex, one of the world's biggest retailers, has remained an acquisitive shopper for new and remodelled space in the UK in recent years.
Among a series of transactions in the quarter it chose the former Debenhams store at the Silverburn shopping centre in Glasgow for its largest letting for Zara.
Henderson Park, the international private equity real estate firm, and Eurofund Group, the pan-European real estate investment and development company, have signed the group for 47,000 square feet over two floors, occupied on a 15-year lease.
It joins the 56 deals the duo has signed during two years of joint venture ownership of the mall, another example of a shopping centre recovering strongly from the pandemic lockdowns.
Time Retail Partners and Culverwell acted on behalf of the joint venture partnership and Zara represented itself.