December 14, 2016
London commercial property has managed to weather the Brexit storm with a late surge of City deals over the past three weeks set to see Central London take-up in line with its long-term average level of 10 million sq ft in 2016. According to the latest figures from JLL, despite take-up in Central London being subdued in the lead-up to and immediate aftermath of the referendum, City take-up has surged during the last quarter, and is expected to reach 5.3 million sq ft by year end, just 6 percent below the long term average. This is offset by strong take-up in East London, where the recent deal to the GPU at Canary Wharf propelled take-up to 8 percent above its long term average level. The most notable deals of 2016 included – The Government Property Unit (GPUK) took 542,000 sq ft at 20 Cabot Square, E14 which was a sub-lease from Barclays; Apple pre-let 500,000 sq ft at Battersea Power Station, SW8 and will be paying a rent in the high £50 per sq ft; Thompson Reuters acquired 315,362 sq ft at 5 Canada Square, E14, paying a rent of £40 per sq ft; 33 Central, EC4 was pre-let to Wells Fargo who took the entire building, totalling 227,689 sq ft and New Look pre-leasing 127,096 sq ft at R7 Handyside Street, N1C for £77.50 per sq ft.
West End take-up is on course to be in line with its long term average of 3.3 million sq ft. The latest figures show that demand has held up much better than many commentators expected, and will help mitigate against rising vacancy in the near term.
Neil Prime, Head of Central London Markets & UK Office Agency JLL, commented: “The recent surge of City deals is encouraging news for Central London, and the City in particular. It demonstrates that demand has been more resilient than many feared, in many cases tenants are seeking more flexibility and earlier break options to address the uncertainty around Brexit rather than abandoning requirements altogether. Businesses are undoubtedly more cautious, but the desire to consolidate operations and upgrade functionally obsolete stock remain key to business strategies.”