Great Portland Estates upbeat after 'strong' quarter

Updating on trading, the London-focused developer and landlord said it had signed 14 new leases and renewals in the fourth quarter, generating annual rent of £5.7m.

In total, it signed £22.5m of leases in the year to 31 March, 9.1% ahead of March 2023’s estimated rental value (ERV)

Vacancies, meanwhile, currently stand at less than 2%.

The FTSE 250 firm also started the redevelopment of Minerva House on the South Bank, which will see more than 143,000 sq ft of offices refurbished.

Toby Courtauld, chief executive, said it had been a "strong" quarter of leasing.

He continued: "Our fitted and fully managed spaces have performed particularly well; our spaces are full and our ability to provide a market-leading, hassle-free experience for our customers is driving returns and reinforces our ambition to grow our Flex activities to 1m sq ft.

"Looking forward, with interest rates and yields at around their peak, we are increasingly confident that our growing development and Flex activities, combined with strengthening rental growth, will drive attractive returns in the near term.

"Furthermore, with the investment market moving our favour, we expect to add to our growth prospects as the year progresses."

The commercial property sector was hit by climbing interest rates alongside falling demand for general office space post pandemic.

Interest rates now sit at 5.25%, but with inflation well off its peak, most analysts expect the Bank of England to soon begin cutting the cost of borrowing.

Demand for flexible, high-end offices in key locations, such as London’s West End, has also remained strong.

GPE is due to post annual results on 23 May.