In its June Commercial Market in Minutes report, the international real estate advisor says that this £10.8 billion is later-stage VC investment, which follows prior successful funding rounds, implying that the recipient companies are arguably more stable and primed for further growth. From its analysis, Savills estimates that these 2021 VC levels could result in a net additional demand of 6.5 million sq ft of office floorspace in the next two years as they continue to expand and add to their headcounts.
Richard Merryweather, joint head of UK investment at Savills, comments: “While these exceptional VC volumes won’t translate into firm requirements for a while, the very healthy pipeline of investment into UK-headquartered companies is a boon for office occupier activity and will continue to support investment activity in the sector. We’re already expecting yields in the provincial offices sector to harden, and see stable yields in South East (M25) offices, boosted by positive commitments by larger corporates to acquire new office space, particularly in the South East. As a strong end to the quarter, Amazon and InterContinental Hotels Group are reported to have signed for a significant amount of space in Reading and Windsor, respectively."
Steve Lang, director in Savills commercial research teams, adds: “Even before the half-way point, this year’s VC total investment total is more than the annual totals for 2010 through to 2014 combined, and average deal sizes have increased at the same time, showing bigger commitment and confidence in the invested companies. Some of these companies won’t expand further, but many will, and will be looking for office space to satisfy their growth ambitions.”
Read Savills full June Commercial Market in Minutes report online here