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The commercial landlord’s land securities say that rents for London offices are rising rapidly, and property valuations are stable and are preparing to sell £2 billion office blocks to fund residential property.
The FTSE 100 landlords reported an increase in net rental income of 6.6% per year through March, spanning a £6.7 billion central London portfolio mainly in urban and West End offices.
“In London, office use across our portfolio continues to grow,” said Mark Allan, CEO of Randsek. “We expect rental value this year to continue to grow at roughly similar rates as new supply across London will remain modest in the near future.”
Alan faces the difficult task of selling about £2 billion in office blocks over five years and generating cash to buy and build thousands of homes. He said he expected these sales to begin in 2026.
Office transactions remain at the lowest level since the global financial crisis, with little liquidity in the block above £100 million. According to Data Group MSCI, trading volume fell 18% in the first quarter across Europe.
Investors have been cautious about buying office buildings since the pandemic and the rise of hybrid work, but rising interest rates have significantly reduced asset values across the sector.
“The portfolio valuation is more subjective as the office is £100 million in the vacuum of investment market trading (above),” Jeffreys analyst Mike Pleu said in a memo ahead of LandSec’s report. He warned that pivots to the homes “may be slower to do organically.”
LandSec’s share fell by about 2% in early London trading.
Alan cited the recent joint venture by the Norwegian Petroleum Fund and the capitals of Grosvenor and Shaftesbury.
Landsec also said that a mix of major shopping centres and other properties also increased by 1.1% in March, including a portfolio of £10.9 billion, according to an independent valuation.
According to analysts at Green Street, this continues to slowly improve property value after a price fell by about 25% on average after two brutal years.
Alan is also making a big bet on the top tier of the shopping centre. Last year, they made a massive deal with Liverpool One and Blue Water. He argues that these properties are in strong demand from retailers, but there are no new constructions.
LandSec looks back from a £341m loss in 2024 to its pre-tax profit of £393m in 2025.
