Investors should be buying into a rapidly polarising London office market, according to Peel Hunt.
Prime rents are shooting ahead and secondaries lagging, with the trend likely to accelerate going forward.
West End rents for example are outperforming the rest by around 20% reckons the broker, which is making some of the listed REITS look attractive.
Modern, fit-for-purpose portfolios combined with the skills and balance sheets to develop into an acute shortage of prime space point to Helical (LSE:HLCL), Great Portland Estates (LSE:GPOR) and Derwent London PLC (AIM:DLN), said Peel Hunt in a sector note.
All three possess meaningful development pipelines, which could add 10-20% to NAV over the coming years, it adds.
Derwent London is upgraded to 'add' from 'hold', British Land Company PLC (LSE:BLND) is a 'buy' as a way to play the London office market, though house stock Helical (LSE:HLCL) remains the broker's top pick.