West End Office:
Market Watch

West End Office Market Watch
West End Office Market Watch

29 March 2017, words by David Garland

450,152 sq ft of February take-up, the highest February total on record

Supply and demand snapshot

■ 450,152 sq ft of take-up was recorded in February across 36 transactions. This brought total 2017 take-up to 764,351 sq ft, 31% above this point in 2016 and 30% above the 10-year average (Graph 1).

 

TABLE 1

Key February stats

 
Table 1

Source: Savills Research

GRAPH 1

Take-up to end of February

 
Graph 1

Source: Savills Research

■ The largest transaction to complete in February saw Arup pre-let floors G-3 (133,600 sq ft) at Derwent London's 80 Charlotte Street, W1. Arup have signed a 20-year lease at a rent of £75.00 per sq ft, as part of the transaction Arup also has an option to take the 40,700 sq ft fourth floor.

■ Another notable transaction to complete in February saw Swedish retailer COS pre-let floors 4-9 (60,096 sq ft) at 1 New Oxford Street, WC1 on confidential terms.

■ Following these transactions, pre-lets have accounted for 38% of 2017's take-up to date.

■ 54% of the 2.3m sq ft of developments and refurbishments scheduled to complete in 2017 have now been committed, leaving just 1.1m sq ft of speculative supply, while 30% of 2018's completions have been pre-let (Graph 2).

GRAPH 2

West End development pipeline

 
Graph 2

Source: Savills Research

■ February saw the first acquisitions of the year by serviced office providers. The Office Group acquired the entire 70,311 sq ft at 84 Eccleston Square, SW1 on a 20-year lease, while London Executive Offices acquired the 9th floor totalling 22,378 sq ft at Nova South, SW1. Since 2015 serviced office providers have accounted for 8% of West End take-up.

■ So far in 2017, the Professional Services sector has been the most active accounting for 25% of take-up. This is followed by the Serviced Office Provider sector (15%) and the Tech & Media sector (14%).

■ Supply rose 1% from the end of January to 4.58m sq ft at the end of February, with the vacancy rate remaining at 3.8%. 77% of supply is of a Grade A standard.

■ There has been a significant increase in the amount of tenant controlled supply. At the end of February this stood at 1m sq ft, equating to 23% of total supply, compared to 0.7m sq ft equating to 15% of total supply at the end of 2016.

■ 489,872 sq ft is currently under-offer in the West End, 18% below the long-term average. 149,771 sq ft of this went under-offer in February.

■ The average Grade A rent in February was £79.14 per sq ft, while the average Grade B rent was £63.42 per sq ft.

■ We are currently tracking 5.5m sq ft of West End & Central London requirements


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

 
javascript:;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 February transactions

 
Table 7

TABLE 8

Significant supply

 
Table 8

MAP 1

Savills West End office submarkets

 
Map 1
 
 

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