Supply under-offer exceeds 1m sq ft

Supply and demand snapshot

■ 348,950 sq ft of take-up was recorded in May across 39 transactions. This brought total take-up to 1.6m sq ft, 2% below this point in 2016 but 6% above the 10-year average. (Table 1)

■ The 12-month rolling take-up at the end of May was 3.9m sq ft, 13% up on the long-term average (Graph 1).

TABLE 1Key May stats

^{Source: Savills Research}

GRAPH 1West End 12-month rolling take-up

^{Source: Savills Research}

■ The largest transaction to complete in May saw Hearst UK acquire floors 2-6 at LSQ, WC2 totalling 70,915 sq ft on confidential terms. The 7th floor is also understood to have recently let, bringing the Old Park Lane development which completed in Q4 2016, to full occupancy.

■ Another notable transaction to complete in May, saw London Executive Offices (LEO) acquire floors 1, 2 and 5 at 20 North Audley Street, W1 totalling 31,520 sq ft. LEO signed a 15-year lease at a rent of £85.00 per sq ft. The transaction was LEO's third Central London acquisition this year.

■ 590,961 sq ft went under-offer in May. A significant proportion of this relates to two British Land Schemes. Dentsu Aegis went under-offer on 310,000 sq ft at the proposed redevelopment of 1 Triton Square, NW1. Four separate parties also went under-offer on a combined 117,000 sq ft at 4 Kingdom Street, W2.

■ The Tech & Media sector continues to be the most active in the West End. The sector accounted for 28% of take-up at the end of May, followed by the Insurance & Financial Services sector (12%) and the Professional Services sector (10%).

■ Total West End supply stood at 4.84m sq ft at the end of May, equating to a vacancy rate of 4.0%, 90bps above the same point in 2016 (Graph 2).

GRAPH 2West End supply

^{Source: Savills Research}

■ There is just 213,000 sq ft of development and refurbishment completions scheduled for Q4, 76,500 sq ft of which has been pre-let. 136,500 sq ft of speculative completions will be added to the supply pipeline next month.

■ The highest recorded rent in May was £105.00 per sq ft. The transaction saw Stepstone acquire the 6th floor at 2 St James's Market, SW1 totalling 8,241 sq ft on a 10-year lease.

■ We are currently tracking 6.4m sq ft of West End & Central London requirements, 5% above the 12-month average.