City Office:
Market Watch

City Office Market Watch
City Office Market Watch

23 August 2017, words by Ben Raywood

Tech & Media sector leading the way in the City accounting for nearly a quarter of take-up

Supply and demand snapshot

■ Take-up for July was 376,470 sq ft, bringing total take-up for 2017 to 3,526,923 sq ft, which is 9% up on this point last year. 80% of transactions to-date have been of a Grade A standard.

■ The 12-month rolling take-up at the end of July was 6.1m sq ft, which is 23% up on the long-term average.

 

TABLE 1

Key July stats

 
Table 1

Source: Savills Research

GRAPH 1

City 12-month rolling take-up

 
Graph 1

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

■ A notable transaction to complete in July saw Withers acquire 57,491 sq ft across levels ground, three and four at 20 Old Bailey, EC4. Blackstone have already agreed a deal with Barings to take 113,000 sq ft.

■ Also in July, Kobalt Music acquired 40,356 sq ft at The River Building, EC4 across the second floor. They have taken the space on confidential terms and now join Deliveroo who signed for the first floor in November last year.

■ In the year to the end of July, the Tech & Media sector accounted for the greatest proportion of take-up at 24%. This is followed by the Professional services sector at 17%, and the Insurance & Financial services sector at 12%. There has been continued strong activity from Serviced Office Providers who have accounted for 8% of take-up to-date.

■ Total City supply stood at 7.5m sq ft at the end of July, equating to a vacancy rate of 6.0%, up on this point last year by 80 bps, however still down on the 10-year average by 60bps.

■ There is an estimated 5.8m sq ft of refurbishments or developments anticipated to arrive to the market in 2018. However, 47% of this already either pre-let or under-offer. This leaves just 3.1m sq ft of available space, with the largest total availability being found at 60-70 St Mary Axe, EC3 with 326,000 sq ft.

GRAPH 2

City rent-bands

 
Graph 2

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

■ For the year to date, 37% of the known rents have been in the £60 - £69.99/sq ft band. This is up on last year and 2015 where this rent band accounted for 36% and 19% respectively.

■ Total City & Central London demand is 8.9m sq ft, which is 1% up on the long-term average, but 3% down on the 12-month average. Circa 36% of the total demand has been known about for over 12 months.


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 July transactions

 
Table 8

TABLE 9

Significant supply

 
Table 9

MAP 1

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

City 2017 Q2 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