West End Office:
Market Watch

West End Office Market Watch
West End Office Market Watch

23 August 2017, words by David Garland

Take-up 37% above the 10-year average with the Tech & Media sector the most active

Supply and demand snapshot

■ The West End continues to witness high levels of tenant demand with 513,691 sq ft of take-up recorded in July across 43 transactions. This is the first time since April 2000 that there has been two consecutive months of take-up exceeding 500,000 sq ft.

■ July's take-up brought total 2017 take-up to 2.9m sq ft, 33% above the same point in 2016 and 37% above the 10-year average.

 

TABLE 1

Key July stats

 
Table 1

■ The largest transaction of the month saw Spotify acquire 104,133 sq ft at The Adelphi WC2. Following a flurry of lettings in recent months, the c.325,000 sq ft Blackstone property has now reached full occupancy.

■ Another notable transaction saw HSBC acquire the entire 36,500 sq ft at 7 Cork Street, W1. The bank signed a 10-year lease with the rent believed to be in the region of £110.00 per sq ft. The Pollen Estate development is due for completion in Q4 2017.

■ Following July's transactions, the Tech & Media sector has reclaimed its position as the most active business sector in the West End accounting for 27% of 2017's take-up. Serviced Office Providers have been the second most active accounting for 23%, with the Insurance & Financial Services sector third at 12%.

■ As is the norm in the West End, smaller transactions have dominated in 2017, with 76% of transactions being below 10,000 sq ft (Graph 1).

Source: Savills Research

GRAPH 1

Number of deals by size band

 
Graph 1

Source: Savills Research

■ Despite just 1% of transactions being >100,000, deals in the size bracket have accounted for the greatest volume of take-up at 23%. This is followed by transactions of 5-10k sq ft (17%) and 15-25k sq ft (15%) (Graph 2).

GRAPH 2

Take-up by size band

 
Graph 2

Source: Savills Research

■ Total West End supply at the end of July stood at 4.92m sq ft, equating to a vacancy rate of 4.1%. This is 80bps above the same point in 2016. 75% of current supply is of a Grade A standard while 28% is tenant controlled.

■ Victoria is the sub-market with the highest amount of supply (811,400 sq ft), followed by Mayfair (608,324 sq ft), Covent Garden (545,352 sq ft) and Hammersmith (541,097 sq ft).

■ We are currently tracking 6.4m sq ft of West End & Central London requirements, 4% above the 12-month average.


Analysis close up

TABLE 2

Take-up

 
Table 2

TABLE 3

Supply

 
Table 3

TABLE 4

Rents

 
Table 4

TABLE 5

Demand & Under Offers

 
Table 5

Demand figures include central London requirements

TABLE 6

Development pipeline

 
Table 6

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 for preceding three months

TABLE 7

Significant July transactions

 
Table 7

TABLE 8

Significant supply

 
Table 8

MAP 1

Savills West End office submarkets

 
Map 1
 
 

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Key contacts

David Garland

David Garland

Research Analyst
Commercial Research

Savills Margaret Street

+44 (0) 20 7016 3832