March 4, 2019
The volume of transactions in London’s West End was down 45 percent, the lowest for January in over 10 years. This is to be expected with the continued ongoing Brexit negotiations, according to Savill’s, who expect to see a lower volume of transactions complete over the first quarter of this year. Despite this, space under offer still remains well above the long-term average, with 237,000 sq ft going under offer during the month. This held the overall total at just over 1.2m sq ft, giving a strong indication that leasing activity over the course of 2019 will remain robust. Pre-lets accounted for 42 percent of the overall sq ft let in January and there were five transactions to the Insurance & Financial sector and four to the Tech & Media sector.
The largest transaction, (and pre-let) to complete so far this year has been Paymentsense’s acquisition of the 8th and 9th floors (33,000 sq ft) of the Brunel Building, W2, on a 15-year lease, at £77.50 per sq ft). Other notable pre-lets to complete include WeWork acquiring the entire building (23,363 sq ft) at 21 Soho Square, W1 and Lansdowne Partners taking the sixth to ninth floors (18,331 sq ft) at 25 Berkeley Square, W1, both on terms which remain confidential at present.
Savills is tracking around 4.1m sq ft of West End & Central London requirements, 40 percent of which are between 10-20,000 sq ft. The Tech & Media and Insurance & Financial sectors continue to be main drivers of requirements, accounting for 38 percent and 22 percent of respectively.
The vacancy rate remained at 3.9 percent with 4.9m sq ft available at the end of the month. Sub 5,000 sq ft floorplates make up 60 percent of current supply in the West End, whilst floorplates >10,000 account for just 13 percent. The balance between landlord and tenant controlled space also remained unchanged from the previous month, with tenant controlled space accounting for 30 percent of supply.
Currently 8.8m sq ft of new developments and refurbishments are scheduled for delivery in the next four years, 34 percent of which has been pre-let. Over the next four years, 5.6m sq ft of speculative space is set to complete, which is an annual delivery of 1.4m sq ft, less than half the average annual Grade A take-up.