Strong start to the year with space under offer at 1.3m sq ft and active requirements up by 42%
Take-up during January reached 238,242 sq ft across 16 transaction. This was up 6% on the same point last year, however down on the long-term average by 30%. Overall 12-month rolling take-up currently stands at 4.4m sq ft. Grade A space accounted for 70% of space that was let over the month.
The largest transaction to complete last month was at Euston Tower, NW1 with Google taking a sub-lease of 134,859 sq ft on terms which remain confidential at present.
Whilst take-up was down on the long-term average, underlying demand continues to remain robust with 1.3m sq ft under offer at the end of the month, up 23% on the average amount we have over the past two years.
Future pipeline developments account for around 40% of space currently under offer and we are anticipating pre-lets will account for around a third of leasing activity over the year.
The total amount of active requirements we are tracking across the West End and Central London stood at 5.2m sq ft at the end of January, up 42% on the average amount we have seen over the past two years and up 22% on the previous month.
Insurance & Financial sector occupiers account for a quarter of these requirements and the Tech & Media sector for 19%. The rest of active demand is fairly evenly spread across the remaining sectors. There is an additional 2.1m sq ft of potential future tenant requirements.
After temporarily rising to 4.4% at the end of Q4, the vacancy rate at the start of this year dropped 20bps to 4.2%, with supply standing at 4.7m sq ft.
We have seen the proportion of supply that is of Grade A standard reduce from accounting for 74% of overall supply in 2015, to making up 59% of at the start of this year, with the amount of Grade B space on the market doubling over the same period.
Supply continues to remain predominantly landlord controlled with tenant controlled space accounting for 28% of supply. There are currently only 25 floors across the core West End sub-markets which could satisfy a single floor requirement over 10,000 sq ft, only eight of these floors are over 15,000 sq ft.
We anticipate the vacancy rate will remain broadly around 4.0% this year, with just 318,629 sq ft of speculative space scheduled for delivery over the second half of 2020. Supply is expected to remain constrained until 2022, with 50% of the development pipeline for 2021 already having been pre-let.
There is currently 7.3m sq ft of extensive refurbishments and new developments scheduled for delivery over the next four years. Currently, 26% of this has already been pre-let. There is a further 1.7m sq ft which is currently scheduled for delivery over 2024, which may change with the passage of time depending on levels of developer confidence and potential planning or construction delays.