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Vanessa Clark, committee member of Develop Croydon Forum, on why big players are finding the borough a more attractive place for their businesses…

The news that two prominent office blocks have just been purchased for a combined £50 million is game-changing as far as Croydon is concerned.

Hermes has just completed its purchase of the iconic Number One Croydon, the so-called ‘50p building’, paying a rumoured £35 million for 200,000 sq ft of office space.

That has been followed by the sale of Metro Point in Sydenham, which achieved £14.75 million.

Why do these deals matter? Because for the past two years the dominant activity in Croydon’s office market has hinged on the Government’s “permitted development” initiative.

This has led to a shift away from what was previously an over-supply of office buildings in Croydon, and many of them have been acquired at increasingly high purchase prices for conversion to residential.

In total, 1.2m sq ft of proposed conversions and a further 1m sq ft of redevelopment have wiped more than 2m sq ft off the Croydon office stock.

As the volume of sales for permitted development purposes has ground to a halt, we have suddenly gone from having too much office stock to a realisation that new quality offices are urgently required as Croydon becomes more attractive to purchasers.

The exciting thing is that we aren’t just talking about any buyers. Major funds and key Central London investors have emerged as the dominant players in Croydon – for example LaSalle Investment Management (Carolyn House and Sunley House), M&G (Renaissance), Blackrock (Lansdowne House), CEL (69 Park Lane) and Aviva (Mott House) on top of Hermes (Number One Croydon) and Rockspring (Metro Point).

Other buyers understood to be circling the Croydon market include Deutsche Bank, Aberdeen Assett Management, Mayfair Capital, Resolution and CBRE.

The demands being placed on the office market are continuing to increase with a rising list of occupiers – both indigenous and from outlying areas, as well as those looking for greater value than they currently receive in central London – considering a relocation.

This is leading to improved prices and yields, as highlighted by Ruskin Square, where Stanhope and Schroder are promising to start on site shortly.

Record levels of rent for Croydon – around £35 per sq ft – are being quoted with reported interest from the likes of Metro Bank, Body Shop and Aecom.

The good news is that quality central London investors now see Croydon as an attractive proposition. As confidence in the town has improved, so have prices.

It’s a whole new ball game for Croydon – but we need more quality offices to be brought forward in the town if we are to take full advantage of this new demand.