One of Britain’s biggest property developers has reinforced the growing shift to a return to office working, saying that occupancy in its central London offices has grown to an all-time high and the value of its portfolio has returned to growth.
The improvement in the market helped Landsec, which owns offices and retail locations such as the Bluewater and Trinity Leeds shopping centres, bounce back to a £243m pre-tax profit in the six months to the end of September.
The company, which has reduced its assets in the City of London from 42% of its office portfolio when the Covid pandemic began in 2020to 23% in 2024, had reported a loss of £193m in the same period last year.
On Friday, Landsec said its West End offices were “practically full” – with occupancy across its central London portfolio growing to a high of 97.9% – and 80% of customers striking lettings deals over the last year either growing space or maintaining existing size.
“Across our central London portfolio, office utilisation continues to grow,” the company said. “Rents for highly sustainable, best-in-class offices continue to grow.”
Investment activity in London had increased and, as a result, the value of its property portfolio returned to growth, Landsec said. “Following two years of softening, property yields stabilised over the last six months.”
Landsec’s overall central London office portfolio grew by 0.8% in value year on year to £6.4bn, and within this its assets in the City of London grew by 1.9% to £1.25bn.
However, the company said the strongest signs of recovery were in its retail property operation, driven by demand for shops from big brands including Primark and JD Sports.
“Brands continue to focus on fewer but bigger and better stores in key locations,” it said. “This means leading brands continue to take more space with us. As supply of both is constrained, rents continue to increase.”
The value of the company’s big shopping centre and retail outlet locations grew by 2.8% year on year to just over £2bn at the end of September.
“Given the attractive returns in major retail, we will focus our investment for the remainder of this year on this, rather than making any new office commitments,” Landsec said.
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Several high-profile companies including Amazon and Asda have recently asked employees to return to office working more regularly, in a boost to the office property market.
Oli Creasey, a property analyst at Quilter Cheviot, said Landsec’s financial results had defied expectations and would be welcomed by shareholders.
“Landsec’s half-year results are strong, particularly when considered against recent history and expectations,” he said. “Today’s results represent a positive surprise for shareholders, and the property market generally, demonstrating that core property sectors are likely past the low point in valuations and have now returned to positive, albeit modest, valuation growth.”
Shares in Landsec increased by more than 2% on Friday, among the top risers on the FTSE 100 index.