Space under offer remains at a high as leasing activity continues to be subdued

Supply and demand snapshot

■ February take-up reached 208,414 sq ft, across 30 transactions. This was the lowest monthly take-up seen over a February period in five years and was in contrast to the record level of take-up seen in February 2017. This brought the total amount of space transacted for the first two months of the year to 456,531 sq ft, down 37% on the same period last year and 20% down on the 10-year long-term average.

TABLE 1Key February stats

^{Source: Savills Research}

■ The largest transaction to complete in February saw financial software company Intuit Limited take 37,661 sq ft on part of the 5th floor at 80 Victoria Street, SW1 on confidential terms.

■ Despite the subdued level of take-up, space under offer continued to remain at a very high level, with a further 217,463 sq ft going under offer over the month. This brought the total amount of space under offer to just over million sq ft. Around at least 27% of space currently under offer is known to be to Serviced Office Operators.

GRAPH 1Take-up to end of February

^{Source: Savills Research}

■ Notable spaces to go under offer over the month include the 2nd floor (40,987 sq ft) at 123 Buckingham Palace Road, SW1, the entire building (21,383 sq ft) at 5 Savile Row, W1 and the 2nd and 3rd floors at 2 St James's Market, SW1 (20,332 sq ft).

■ The Tech & Media sector continued to lead take-up, accounting for 49% of take-up over the month. So far in 2018 Tech & Media occupiers have taken 168,484 sq ft in total. This was followed by the Insurance & Financial sector with a market share of 16% and Retail & Leisure sector also at 16%.

■ Supply at the end of February rose to 4.80m sq ft, equating to a vacancy rate of 4%, up 20 bps on the previous month. Grade A supply increased from 61% at the end of the previous month, to 69%, and tenant controlled space also increased 2% to 30%.

■ The most notable addition to supply was the 14th to 19th floors at Euston Tower, adding 60,708 sq ft to Grade A supply.

■ Victoria has remained as the sub-market with the highest amount of current supply (608,178 sq ft). This is followed by Mayfair (563,060 sq ft), and St James's (545,072 sq ft).