Beginning 2021 in a third national lockdown has led to slow and subdued levels of take-up throughout January, with the overall take-up totalling 31,219 sq ft. This was down 89% on January 2020, and 92% on the January long-term average. It is also the lowest January take-up we have seen since our records began, and overall 12-month rolling take-up currently stands at 1.5m sq ft.

Across the seven transactions that took place, 29% were of Grade A standard, and none were above 10,000 sq ft. The largest of these transactions was Superbet’s acquisition of the 4th floor at 111 Buckingham Palace Road, SW1, (7,780 sq ft), at a rent of £70.50 per sq ft, on a 10-year lease.

Despite the subdued leasing activity, the amount of space under-offer in January has risen significantly compared to the previous three months, however, it is still 29% below the long-term average. Last month saw 121,624 sq ft of space go under offer, accounting for 15% of the overall total, which stands at 802,178 sq ft. The MediaWorks building at Wood Lane contributed to 36% of this newly under-offer space.

Future pipeline developments account for around 37% of space under offer and based on the overall amount of take-up over the past five years, we are anticipating pre-lets will account for 28% of this year’s take-up as a result of the continued strong levels of demand we are seeing for newly developed stock.

The total amount of active requirements we are tracking across the West End and central London stood at 3.9m sq ft, down 12% on the average we have seen over the past two years, and down 8% on the previous month.

The Tech & Media sector accounts for nearly a quarter, 23%, of these requirements, while the Professional sector and the Insurance & Financial Services sector closely follows, accounting for 20% and 19% respectively.

Throughout 2020 the level of supply slowly ticked up and the beginning of this year has seen supply rise further to reach 7.2m sq ft, taking the vacancy rate to 6.3%. This is 10 bps higher than it was at the end of last year, and we predict that the vacancy rate will rise to 7.3% by the end of 2021. This is largely due to the increased amount of tenant space that is coming onto the market.

The total amount of tenant-controlled supply amounts to 2.7m sq ft, which comes to 38% of the overall amount. In January, 107,711 sq ft of tenant space came on the market, 90,000 sq ft of which was the entirety of 160 Great Portland Street, W1, which is available by way of assignment until 2032.

We have seen the overall amount of Grade A space available steadily decrease throughout the years, from 80% in January 2016, to 59% last month. Meanwhile, the level of Grade B space has increased by more than two thirds within the same period, highlighting how the greater demand for high-quality space is not diminishing.

There is currently 12.4m sq ft of extensive refurbishments and developments scheduled for delivery over the next four years. Currently, 27% of this space has already been pre-let. There is a further 2.1m sq ft which is currently scheduled for delivery in 2025, which may change with the passage of time depending on levels of developer confidence and potential planning or construction delays.

Analysis close up

Market of the Month – Mayfair

Each submarket across the West End varies in both its supply and take-up levels, and this month we have taken a closer look at Mayfair. The chart below (Mayfair supply) indicates that, much like the whole of the West End, supply has been steadily increasing over the past year. At the end of January supply in Mayfair stood at 759,763 sq ft, which equates to a vacancy rate of 5.9%. Although this is up on the long-term average by 80bps, it has fallen by 30bps from Q4 2020.

Take-up last year reached 194,687 sq ft in this submarket, which was down 58% on the long-term average. This was largely as a result of the inevitable dampened levels of leasing activity we have seen across the West End, as a result of Covid-19. While we expect leasing levels to remain low, Mayfair currently has the largest amount of space under offer out of the core West End submarkets, accounting for 43% of space under offer.

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