January has always been a quieter month for take-up levels due to the inevitable New Year lull, with leasing activity for the month often being the lowest achieved throughout the year due to the holiday season. This year January has been relatively busy, certainly if this is compared to last year, with take-up reaching 219,983 sq ft, across 31 transactions. This is 304% up on January 2021’s levels, taking the 12-month rolling total to 4.4m sq ft. However, it is worth noting that this is still 35% down on January’s ten-year average for take-up.

While transactional activity was in line with usual January levels, by way of number of transactions, under offers for the month were the highest we have seen since August 2019. The total came to 327,390 sq ft which is 31% above the long-term average and took the total to 1.6m sq ft for the West End. This flurry of activity will be interesting to track throughout the rest of the year, particularly as all Covid-19 restrictions are set to ease by the end of February.

Last month there were two transactions to complete that were over 20,000 sq ft, with the largest being Blackstone acquiring the 4th wing at Berkeley Square House, W1, (22,497 sq ft), at a rent of £115.00 psf. Following this, it was Anadarko Petroleum’s acquisition of the 11th floor at Nova North, SW1, (21,535 sq ft), for a five-year lease with a rent that is currently confidential.

The total number of Central London and West End active requirements at the end of January stood at 4.55m sq ft, with 1.3m sq ft of this total being tracked as currently under offer. With there also being 2.1m sq ft of potential requirements also, this brought the total number of requirements to 6.7m sq ft, which is both 2% below the long-term average and the 12-month average.

From the active requirements total, the Insurance & Financial Services sector dominated, accounting for 26% of the total number of active requirements. This aligns with the leasing activity we have seen so far this year, with this business sector also accounting for the largest sector for take-up, totalling 32.4%.

At the end of January, the vacancy rate stood at 6.3% for the West End – this is the lowest it has been since January 2021, with this being the third consecutive month in a row that it has fallen. The total came to 7.4m sq ft, which is a 2.1% decrease from the previous month. However, the vacancy rate is still 2.2% above the 10-year long-term average vacancy rate, which stood at 4.1%.

Notwithstanding this, we have already tracked 135,834 sq ft of space that has been withdrawn from the market so far this year, and the amount of grey space has fallen from where it stood in December to reach 1.96m sq ft. This is the lowest it has been since August 2021, and it now only accounts for just over a quarter of the overall supply levels.

Looking forward, 2022 and 2023 are set to be record years for the number of developments and extensive refurbishments that are set to complete. At the end of this year, we are anticipating 3.46m sq ft of new space to complete, with 42% of this already having been pre-let. This illustrates occupiers renewed confidence in the market and a commitment to encourage their workforce back into the office.

Between 2022–2025 we are tracking 10.96m sq ft of developments and extensive refurbishments that are due to complete, with 18% of these being pre-let. Many of these schemes could be pushed back further to 2026 or 2027 due to rising buildings costs, yet either way, we expect the next few years to be busy for developers as a number of new schemes are set to emerge.

Analysis close up

In Focus – Mayfair

This month's ‘In Focus’ is centred around Mayfair as its resilience over the past year, and its ability to not respond in a ‘typical’ recessionary manner has left it in good stead for the year to come. In fact, Mayfair was the sub-market that accounted for the largest level of take-up in January, amounting to 58,726 sq ft, which was 26% of the monthly total. Further to this, the amount of space that is under offer in Mayfair bodes well for the year ahead, with the total reaching 108,113 sq ft which is 11.8% of the under offer total for the West End.

With Mayfair traditionally being dominated by financial occupiers, who are willing to pay higher rents for smaller floor plates, this sub-market is often responsible for the highest rents achieved for the West End. Last month was no different, with the top rent achieved, reaching £150 psf, due to the Medical Properties Trust acquisition of the 6th and 7th floors at 61 Curzon Street.

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