12 Jan 26
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Commercial
Curchod & Co has reported a sharp rise in investor interest in well-located secondary offices across Surrey, Hampshire and Berkshire, driven by yield rebalancing and suppressed capital values.
The firm’s 2025 Surrey, Hampshire & Berkshire Office Investment Market Report reveals that total office investment volume across the three counties rose by 14% to £621 million in 2025, despite the number of transactions falling to just 38 deals. The average net initial yield (NIY) compressed to 12.32%, from 13.20% in 2024, reversing the trend of yield softening seen since 2022.
“Buyers are being more selective, but we’re seeing renewed confidence where income is strong, or the PD fallback underpins pricing,” said Alex Blown of Curchod & Co. “Secondary office pricing looks increasingly attractive, and that’s where we’re seeing real opportunities.”
The standout transaction was McLaren’s £250 million repurchase of its Woking Technology Centre, reflecting a 7.40% NIY. Chineham Park in Basingstoke also sold for approximately £100 million. Other significant deals included the tenant acquisition of the NATS HQ on Solent Business Park for £37.5 million, and two transactions in Staines: STR Capital’s purchase of Lotus Park for £32.5 million and David Samuel Asset Management’s £20 million acquisition of Strata.
Developers dominated the buyer profile, accounting for 45% of acquisitions. Notably, 44% of deals involved a change of use, predominantly to residential, with the balance targeting industrial or warehouse conversion.
Despite fewer sales, the average deal size surged by 83% to £13.4 million. Funds continued to lead vendor activity, representing 53% of disposals.
Prime yields for best-in-class buildings now stand between 7.00% and 8.00%. Secondary yields, by contrast, range between 12.50% and 14.50%. Historically, prime yields between 2001 and 2004 were between 6.00% and 7.00%, while secondary assets traded between 8.00% and 9.00%, meaning the spread was around 200 basis points. Today, that gap has widened to more than 550 basis points, underlining the scale of the repricing in the secondary market.
Many prime assets transacting in the current cycle have undergone comprehensive refurbishment or offer long income profiles, providing high-quality accommodation with strong sustainability credentials.
With interest rates forecast to continue falling through 2026 and 2027, combined with rising occupational demand and rental growth forecasts in key towns, pricing in well-located secondary offices is expected to look increasingly attractive to value-add investors.
“With strong underwriting and the right strategy, we expect investors to achieve significant value growth through 2026,” added Blown.
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