City Office:
Market Watch

City Office Market Watch
City Office Market Watch

29 March 2017, words by Ben Raywood

Big pre-let at 100 Bishopsgate keeps take-up ticking over

Supply and demand snapshot

■ Take-up for February was 364,419 sq ft, bringing total take-up for 2017 to 666,958 sq ft, which is 18% down on this point last year. 82% of the transactions were of a Grade A standard.

■ The 12-month rolling take-up at the end of February was 5.7m sq ft, which is 15% up on the long-term average.

 

TABLE 1

Key Feburary stats

 
Table 1

Source: Savills Research

GRAPH 1

City 12-month rolling take-up

 
Graph 1

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

■ A notable transaction to complete in February saw Freshfields Bruckhaus Deringer LLP acquire 249,633 sq ft at 100 Bishopsgate, EC2 on a 20 year lease. The new development which is expected to achieve practical completion at the end of 2018 is now at least 67% pre-let (excluding option space) with both RBC and Jefferies already committing to the scheme.

■ Another notable deal from February saw Silverfleet Capital acquire 8,346 sq ft of the part 3rd floor at 1 Carter Lane, EC4. They took the space on a 10 year lease with a five-year break, at £65.00/sq ft with a total of 19 months rent free.

■ At the end of February, the Professional services sector accounted for the greatest proportion of take-up at 47%. This is followed by the Tech & Media sector at 11%, and the Insurance & Financial services sector at 7%.

■ The City core has accounted for 71% of take-up so far this year, significantly up on the 62% share it has averaged over the last five years.

■ Total City supply stood at 7m sq ft at the end of February, equating to a vacancy rate of 5.6%, up on this point last year by 130 bps, however still down on the 10-year average by 100bps.

■ A total of 577,012 sq ft went under-offer in February, the highest monthly amount since March 2015. This brings total space under-offer to 1.2m sq ft, which is just 10% down on the long-term average.

■ Total City & Central London demand is 9.5m sq ft, which is up by 9% on the long-term average.

GRAPH 2

Amount under-offer each month

 
Graph 2

Source: Savills Research

Analysis close up

 

TABLE 2

Monthly take-up

 
Table 2

TABLE 3

Year-to-date take-up

 
Table 3

TABLE 4

Rents

 
Table 4

TABLE 5

Supply

 
Table 5

TABLE 6

Development pipeline

 
Table 6

TABLE 7

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)

TABLE 8

Significant February transactions

 
Table 8

TABLE 9

Significant supply

 
Table 9

MAP 1

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

City 2016 Q4 stats

 
Map 1

Source: Savills Research

 
 

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Key contacts

Ben Raywood

Ben Raywood

Associate
Commercial Research

Savills Margaret Street

+44 (0) 20 7409 8791

 

Peter Thursfield

Peter Thursfield

Director
Central London

Savills Finsbury Circus House

+44 (0) 20 7409 8928

 

Josh Lamb

Josh Lamb

Associate Director
Central London

Savills Finsbury Circus House

+ 44 (0) 20 7409 8891