April’s leasing activity sees greater diversity in sectors and location
During April, take-up reached 167,548 sq ft across 18 transactions, taking the year-to-date total to 959,682 sq ft. This is down 22% on the ten-year average; however, this still represents a 2% increase on 2021’s leasing activity for this point in the year.
The largest transaction to complete this quarter was Samsung’s lease of the part third floor (25,000 sq ft) at 80 Strand, WC2, for an achieved rent of £75.00 per sq ft.
In a break with recent months where the Insurance & Financial Services sector has dominated leasing activity, April’s take-up was made up of a relatively diverse group of sectors. Although Insurance and Financial Services still accounted for the largest share at 28%, it was followed closely by the Tech & Media and Retail & Leisure sectors on 23% and 22%, respectively. These sectors were not only boosted by the Samsung transaction but also by Puig’s pre-let of the part first and second floors (24,783 sq ft) at Hines’ new development at Grain House, Drury Lane, WC2, for £86.25 per sq ft.
Notably, the highest rents achieved this month did not take place in the core, but at The Kensington Building, 1 Wrights Lane, W8, where Manchester United took the fifth floor (8,524 sq ft) for £120.00 per sq ft, while Ilex leased the part fourth (8,886 sq ft) for £115.00 per sq ft.
Tenant-controlled space has grown in the last two months, standing at 1.54m sq ft, up 10% since February thanks to notable releases of space, including Twitter seeking to sublease 85,000 sq ft at its office at 20 Air Street, W1. In fact, 39% of tenant-controlled space added in this time period has been in Soho, followed by NOX East on 30%. In spite of this, the amount of grey space remains 11% below the five-year average and only makes up 20% of overall supply.
Furthermore, overall supply has remained stable, with the vacancy rate dropping 10 bps to 6.6%. Although Savills latest forecast is expecting this to rise off the back of subdued leasing activity. A record amount of new developments are also expected to put upward pressure on this figure.
However, the newest and amenity-rich space is still benefiting from strong demand, as evidenced by the fact that 34% of this year’s pipeline has already been pre-let.