City Office:
Market Watch

City Office Market Watch
City Office Market Watch

21 December 2017, words by Ben Raywood

City take-up exceeds last year and 10-year annual average with a month still to go

Supply and demand snapshot

■ Take-up for November was 611,974 sq ft, bringing total take-up for 2017 to 6m sq ft, which is 20% up on this point last year. 83% of transactions to-date have been of a Grade A standard. We anticipate the year to end at circa 6.3m sq ft, 8% up on both 2016 and the 10-year average.

■ The 12-month rolling take-up at the end of November was 6.8m sq ft, which is 17% above the same point in 2016 and 37% up on the long-term average.



Key November stats

Table 1

Source: Savills Research

■ There was a total of 35 transactions in November with an average deal size of 17,485 sq ft.

■ A notable transaction to complete in November saw WeWork acquire the whole of One Poultry, EC2, a newly refurbished 116,277 sq ft building. They took the space on a straight 15-year lease at an average overall rent of £65.00/sq ft, with 28 months rent free. The serviced office provider has now taken circa 387,000 sq ft in the City this year alone.

■ Also in November, we saw the first letting at Creechurch Place, EC3 when insurance provider Hyperion took levels 11 - 17 (115,910 sq ft) on confidential terms. They will be consolidating from multiple offices. The third floor (15,969 sq ft) was also let to Travelers Management Limited last month.

■ In the year to the end of November, the Tech & Media sector accounted for the greatest proportion of take-up at 20%. This is followed by the Professional services sector and the Banking sector both at 13%. While the Insurance & Financial services sector and the Serviced Office Provider sector have both accounted for 12%.


City take-up by quarter

Graph 1

Source: Savills Research – data accurate to end of November 2017

■ Some have suggested the success of the City market this year has been distorted by the increase in serviced office take-up. However, with this take-up removed from the current and historic City data, we are still 17% up on this point last year, and 9% up on the 10-year average for the year-to-date.

■ Total City supply stands at 7m sq ft at the end of November, equating to a vacancy rate of 5.6%, which is 20 bps down on this point last year and down on the 10-year average by 100 bps.

■ However, we will be adding in circa 500,000 sq ft of new supply at the end of December for schemes that will be completing in Q2 2018. This will have upward pressure on the vacancy rate, which should finish the year at around 6.0%.


City development pipeline

Graph 2

Source: Savills Research – data accurate to end of November 2017

■ Following a review of future supply, we have included a number of schemes for 2019 onwards. There is an average of 3.7m sq ft of new supply per annum for 2018 - 2021, of which 25% is already pre-let. Therefore, this reduces to an average of 2.8m sq ft of speculative space per annum for the next four years.

Analysis close up


Monthly take-up

Table 2


Year-to-date take-up

Table 3



Table 4



Table 5


Development pipeline

Table 6


Demand & under offers

Table 7

Demand figures include central London requirements

Completions due in the next six months are included in the supply figures

*Average prime rents for preceding three months

** Average rent free on leases of 10 years with no breaks for preceding three months

N.B We have amended our historic stock figure, resulting in a slight change of our historic vacancy rates (Aug 2015)


Significant November transactions

Table 8


Significant supply

Table 9


Savills City Office Market Area (updated at the end of each quarter)

City 2017 Q3 stats

Map 1

Source: Savills Research


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Ben Raywood

Ben Raywood

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Peter Thursfield

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Josh Lamb

Josh Lamb

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