London’s West End office market remains strong

The volume of transactions in London’s West End office market was down 45% at the beginning of the year – the lowest levels for January in over a decade.

According to Savill’s – the global real estate services provider – this was expected due to ongoing Brexit negotiations. Savill’s also expected to see a lower volume of transactions completed over the first quarter of 2019.

Despite this, around 237,000 sq. ft of office space was under offer in March, keeping under offers well above the long-term average. This pushed the overall total to just over 1.2 sq. ft, providing a strong indication that leasing activity over the course of the year will remain robust even with a slow start to the year.

The amount of space that remains under offer also provides a glimmer of hope, as this increased to 1.3m sq. ft at the of February 2019, remaining well above the long-term average of 650,000 sq. ft. In addition, Savills also saw a further 600,000 sq. ft of new West End office and Central London requirements over the month, taking the total demand to 4.7m sq. ft – the highest point in eight months.

Savills predict leasing activity will pick up over the second quarter, due to the increased demand since the beginning of the year.

Pre-lets take over West End offices

Pre-lets accounted for 42% of the overall sq. ft let in January 2019, with five transactions to the Insurance & Financial sector, and four to the Tech & Media sector.

A pre-let was to thank for the largest transaction to be completed this year so far; Paymentsense’s acquisition of two floors (equating to 33,000 sq. ft) of the Brunel Building on a 15-year lease (at £77.50 per sq. ft).

Additional pre-lets to note include WeWork’s acquisition of 21 Soho Square (the entire building equating to 23,363 sq. ft) as well as W1 and Lansdowne Partners acquiring the 6th to 9th floors at 25 Berkeley Square (18,331 sq. ft).

Currently, Savills is tracking around 4.1m sq. ft of London’s West End and Central London requirements, 40% of which are between 10-20,000 sq. ft. The Insurance & Financial and Tech & Media sectors continue to be the main driving force of requirements, accounting for 22% and 38%.

Remaining at 3.9%, the vacancy rate was left with 4.9m sq. ft available at the end of February. Also remaining unchanged from the previous month, is the balance between landlord and tenant controlled space, with tenant controlled space accounting for 30% of supply.

As it stands, around 8.8m sq. ft of new developments and refurbishments are scheduled for delivery in the next four years, 35% of which has been pre-let.

2019-04-04T09:09:29+00:00 April 4th, 2019|London Business News|0 Comments

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