West End Office:
Market Watch

West End Office Market Watch
West End Office Market Watch

28 February 2017, words by David Garland

A relatively strong start to 2017 sees 314,199 sq ft of take-up and 237,788 sq ft go under-offer

Supply and demand snapshot

■ 314,199 sq ft of take-up was recorded in January across 35 transactions. This brought the West End's 12-month rolling take-up to 4.00m sq ft, 5% above the 10-year average (see Graph 1 below).

 

TABLE 1

Key January stats

 
Table 1

Source: Savills Research

GRAPH 1

West End rolling take-up

 
Graph 1

Source: Savills Research

■ The largest transaction to complete in January saw McKinsey pre-let floors 5–8 (97,000 sq ft) at Brockton Capital and Oxford Property's The Post Building, 21–31 New Oxford Street, WC1. The management consulting giant signed a 15 year lease with the rent believed to be in the high £90's per sq ft. As part of the transaction McKinsey has the option to acquire an additional 30,000 sq ft. The development is set to complete in Q1 2018.

■ Child & Child became the first tenant to acquire Space at Land Securities Nova North, SW1. The solicitors acquired the 2nd floor (22,257 sq ft) on a 10-year lease at a rent of £69.50 per sq ft. 280,232 sq ft remains available across the two Nova Buildings with an additional 45,584 sq ft under-offer.

■ Old Park Lane also let their first floor at LSQ, SW1. The NFL acquired the top 8th floor (9,694 sq ft) on a 10-year lease at a rent of £90.00 per sq ft.

■ Elsewhere, ahead of its approaching IPO which is likely to see the company valued at over £15bn, Snapchat reaffirmed its commitment to London as its international headquarters by acquiring 20,893 sq ft at 77 Shaftesbury Avenue, W1 on confidential terms. Snapchat already occupy 12,020 sq ft at 7–11 Lexington Street, W1.

■ The Business & Consumer Services sector was the most active in the West End in January accounting for 40% of take-up. The Tech & Media sector was the next most active (23%), followed by the Insurance & Financial Services sector (14%).

■ Supply at the end of January stood at 4.54m sq ft, equating to a vacancy rate of 3.8%. This is 80bps above the same point in 2016 but 50bps below the 10-year average vacancy rate of 4.3% (see Graph 2).

GRAPH 2

West End supply

 
Graph 2

Source: Savills Research

■ 541,192 sq ft is currently under-offer in the West End, the highest total since the EU referendum. 237,788 sq ft went under-offer in January alone.

■ The average Grade A rent in January was £84.41 per sq ft.

■ British Land let a further two floors at 7 Clarges Street in January, with both rents believed be in excess of £120.00 per sq ft. Fortress Investment group acquired the 4th floor (8,134 sq ft), while Quantum Pacific acquired the 5th floor (6,304 sq ft). Following the transactions, just the 1st floor (9,468 sq ft) remains available.


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 five years for preceding three months

TABLE 7

Significant January 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