Great Portland Estates bullish after securing new leases

Great Portland Estates said on Thursday it had secured a number of new leases over the last six months, boosted by "healthy" demand for high-quality office space.

The FTSE 250 property developer said it had signed 37 new leases and renewals in the six months to 30 September, generating annual rent of £11.2m. Nine of the leases are fully managed.

Market lettings were on average 13.4% ahead of March 2023’s estimate rental value.

Elsewhere in its portfolio, the landlord - which focuses on high-end properties in central London - committed to the redevelopment of Jermyn Street Piccadilly, formerly French Railways House, after it agreed a new head lease in July.

It was also making "good progress" ahead of the potential redevelopment of Minerva House, SE1, it noted, after Southwark Council resolved to grant planning permission.

However, two other planning applications to the council, to redevelop New City Court, SE1, were turned down by the Planning Inspector and secretary of state.

GPE also acquired three freehold interests during the first half for £70m.

Toby Courtauld, chief executive, said: "We are seeing healthy demand across our range of high-quality, well-located spaces, signing up customers at rents comfortably ahead of March 2023.

"Looking ahead, current market conditions will likely further constrain supply in a market where high-quality space is extremely scare. As customers compete to secure the next home for their business, we fully expect the gap between the best spaces and the rest to widen.

"Our clear focus on meeting this demand, with prime sustainable spaces…in core central London locations means we are well placed."

As at 1115 BST shares in GPE were ahead 1% at 392.8p.

Andrew Saunders, analyst at Peel Hunt, said: "It is reassuring to see the company’s growing confidence in the London office market leading to new developments being committed, that while supressing earnings and dividends over the next two years, should provide an uplift to future capital values and net tangible assets once the property cycle regains momentum."

The wider commercial property sector has been knocked recently, after the cost of borrowing surged and demand for offices fell due to homeworking.