The Central London commercial real estate market is populated with reimagined historic buildings and 21st-century architecture. Although office buildings maintain a commanding presence, numerous retail businesses are also located in the downtown business sector.
Greycoat, an independent firm with well-established office development roots, previously leased office space from the Crown Estate. An independent commercial entity born of an Act of Parliament, the Crown Estate has a wide-ranging portfolio of holdings and produces a significant amount of revenue for the British government.
Most recently, however, Greycoat moved into its co-owned building at 15 Suffolk Street in London SW1. Greycoat will enjoy multiple benefits from this strategic move.
Spotlight on the Central London Commercial Real Estate Market
Like other commercial real estate markets, the Central London business marketplace contains a mix of higher- and lower-end properties. In Q3 2023, Cushman & Wakefield published a report on this diversified real estate sector.
The respected U.K. building consultancy business predicted that the most desirable higher-end properties would continue to realize positive leasing results. Because less top-grade space is now available, a three-tier market has now emerged.
Cushman & Wakefield also noted that the premium properties’ rental values continue on an upward trajectory. To illustrate, through Q2 2023, 2.44 million square feet of Grade A office space received leasing contracts. However, second-tier prime commercial inventory and the remainder of the market didn’t perform as impressively during this period.
The lower end of the Central London commercial property sector also shows signs of continued movement through late 2023. Specifically, Cushman & Wakefield pointed out that some properties benefited from value-added projects. These developments ideally positioned those properties for future leasing and investment.
Finally, Cushman & Wakefield stated that the Central London commercial real estate investment market has seen robust growth. For the 12-month period before Q2 2023, 8.5 billion pounds (approximately $10.5 billion) had been invested in the marketplace. Most of the investments were centered in the West End. This development mirrors the sector’s leasing activity..
Logistics of the Greycoat Real Estate Move
In September 2021, international real estate company Hines sold its office building, 15 Suffolk Street, in Central London. Representing the Hines European Core Fund, Hines accepted an offer from two notable joint venture partners: Heitman and Greycoat Real Estate. The transaction took place after Hines had completed almost 15 years of successful asset management of this property.
Heitman is known as a leader in the worldwide investment management arena. The firm currently has $51 billion in managed assets. Greycoat is a respected independent real estate firm with more than 40 years of expertise in Central London’s office marketplace. Currently, 15 Suffolk Street is fully occupied by Stonehage Fleming. This reputable firm has advised many of the globe’s leading family offices.
The 15 Suffolk Street commercial property is an imposing five-story building with a classic 1950s-era cachet. Located in the London West End theater district, the 20,000-square-foot office building is near Trafalgar Square and the Haymarket.
In 2007, global real estate company Hines acquired 15 Suffolk Street, acting in the Hines European Core Fund’s interest. This notable acquisition took place after a full building refurbishment was completed in 2006. Hines engaged in nearly 15 years of hands-on asset management of this historic property.
In 2012, 15 Suffolk Street benefited from another dramatic makeover. Managed by Romford, Greater London-based contractor HBS Ltd., the complete refurbishment began with a full-building scaffolding and repainting. The structure’s roof, railings, and architectural features also received extensive updates.
Three Benefits of Operating in an Owned Building
Conducting business in an owned building offers multiple advantages. To begin, operating in the firm’s owned building provides added credibility and stability. This is a key factor in the highly competitive commercial real estate marketplace. Greycoat enjoys two other significant benefits.
Second, a business that leases its operating space doesn’t benefit if the structure’s value increases. In contrast, a company that operates in an owned building will benefit if its value grows beyond the purchase price. The property’s value can be affected by its location, market conditions, and rising (or falling) interest rates.
And third, building owners typically lease their unused office space to other businesses. This provides regular income, which is especially important in an uncertain economic environment. Leasing income also helps to compensate for building insurance, taxes, and maintenance expenses.
Operating in its 15 Suffolk Street building, Greycoat has an excellent vantage point of the Central London commercial property market. Staffed by recognized industry specialists, the firm now executes large-scale commercial development and asset optimization.
Greycoat also provides unparalleled investment expertise to third-party institutional investors. Taken together, these endeavors position the firm for ongoing leadership in the Central London commercial real estate marketplace.
