Derwent London shrugs off concerns about the commercial property market with new deal with Cushman & Wakefield

Property investment business Derwent London has reported new lettings in 2024 totaling £5.4m, including a £1.8m deal announced today.

The company has announced a new 15-year lease with Cushman & Wakefield at a rent of £1.8m for 17,100 sq m on Baker Street.

The deal was struck at a “substantial premium” to the December rent, Derwent London said.

First quarter rentals averaged 9.2% above December rent.

The company’s vacancy rate fell to 3.7% in March from 4% in December. It added that 58% of the space available for occupancy in December 2023 was “either leased or under offer”.

The deals include buildings leased to Starbucks, incident.io and PLP Architecture – two of which are in the City and the third on Oxford Street.

Derwent London said it had seen a “positive trend” in interest in its London properties.

Broken down by rent, 58% of year-to-date lettings were in the West End and 42% were in the City Boundaries.

Net debt rose marginally from £1.37bn at the end of March to £1.36bn at the end of December.

In April, the company exchanged contracts to sell Turnmill EC1 to Titan Investors, a UK investment manager. The sale price before costs was £77.4m, three per cent above the December 2023 book value.

“We are seeing further strengthening of occupational demand for our well-located, design-led buildings,” said Paul Williams, chief executive of Derwent London.

“Rental growth has picked up, as evidenced by our leasing performance against ERV. As part of our capital recycling strategy, we were delighted to agree to sell Turnmill above book value, with the proceeds to be reinvested in our West End regeneration pipeline at higher returns,” added Williams.

Derwent London owns 66 buildings valued at £4.9 billion as of 2023, making it one of the largest office-focused real estate investment trusts in London.