Highlights global appeal of London serviced office market as it has delivered consistently strong returns
Office Space in Town (OSiT), one of the UK’s leading serviced office providers, is pleased to announce that Kailong, a leading Chinese real estate asset manager, has invested in the firm’s two London serviced office joint ventures, which have a combined value of £160 million.
Kailong is taking a majority stake in in OSiT’s first joint venture, LSOI, replacing global real estate investors, Forum Partners, which initially backed the serviced office vehicle alongside OSiT. The Shanghai-based firm is also taking a majority stake in OSiT’s second joint venture, LSO II, in which Forum Partners remains an active partner and shareholder.
Securing the backing of an international real estate investor of the stature of Kailong significantly boosts LSO II’s investment capability as it seeks new opportunities in the Central London office market, which has delivered consistently strong returns over the past few years.
The two serviced office joint ventures target Central London commercial office space in the City fringes, West End and Midtown and the strategy is to secure properties in excess of 25,000 sq. feet and within four minute radius of tube or rail links.
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The first serviced office joint venture, launched in 2012, currently consists of three high-spec serviced offices in Liverpool Street, St Paul’s and Waterloo. The second joint venture, was launched in August 2014, which currently has 20 St Dunstan’s Hill, a prime building in the heart of the city, and adjacent to the iconic Monument landmark, as its key asset.
The St Dunstan’s office is OSiT’s most recent addition to its growing portfolio of boutique serviced offices. Designed in consultation with iconic luxury yacht brand, Sunseeker, the building provides a sleek, nautical interior, complete with serviced bedrooms, in-house treatment rooms and a rooftop terrace café with exceptional views of the City, the Shard and Tower Bridge.
Following the strong growth of serviced offices globally, the sector has rapidly emerged as a very attractive subsector within the commercial real estate market and a sought-after opportunity for institutional investors, which are now beginning to regard the serviced office sector as an asset class in its own right.
Though the market’s growth has been impressive across Europe and the US, it is the UK that is leading the way, with a comparatively mature market accounting for 36% of serviced offices globally. The changing face of business, the need for cost efficient flexibility and scalability and the rising numbers of small to medium sized enterprises searching for workspace that is adaptable and does not involve long leases, has helped fueled this high demand for serviced offices.
Also London continues to be the pre-eminent city for serviced offices, though in regional cities such Manchester, Bristol, Glasgow and Edinburgh the sector is growing fast too. The Capital’s serviced office market, which accounts for 30% of the UK market, has grown exponentially in recent years, experiencing a 67% increase in floor space dedicated to serviced offices between 2004 and 2015.
Giles Fuchs, Co-founder and CEO of Office Space in Town, commented:
“To attract a global real estate investor of the calibre of Kailong is strong endorsement for the strategy and performance of our two serviced office joint ventures. To date, both have generated significant value and returns and the commitment of Kailong and also Forum Partners illustrates serviced offices’ emergence as a separate asset class offering attractive returns for institutional investors.”
Don Tan, Vice President Fund Management of KaiLong, commented:
“With its vast experience in this sector, Office Space in Town is the perfect partner for us as we expand into the UK. Serviced offices are a very attractive new asset class, underpinned by strong growth drivers in both the UK market and globally and we believe offer excellent investment opportunities. We look forward to working with our new partners to identify further quality assets to enhance the current portfolio and maximise returns.”