November sees highest monthly take-up in four years bolstered by HSBC’s 556,000 sq ft move to the City
November saw 983,620 sq ft complete across 30 transactions. This brought year-to-date transactions to 5.4 million sq ft, a 6% increase on the five-year average and a 6% decrease on the long-term average for this period.
This month saw a continued dominance from the Insurance and Financial sector driving leasing activity – it was responsible for 81% of take-up by sq ft this month and has accounted for just under a third of take-up for the year.
The high volume of space leased during November was largely as a result of HSBC’s pre-let of Orion’s Panorama Scheme at 81 Newgate Street, EC1 (556,000 sq ft). HSBC will be relocating from the 1 million sq ft they were occupying in 8 Canada Square.
November also saw the highest rent we have seen this year at the JJ Mack Building; a BREEAM Outstanding, EPC A-rated, NABERS 5* building. This is alongside the extra amenity offering of three large roof terraces. Corio Generation has taken a ten-year lease on the ninth floor (13,408 sq ft) for £112.50 per sq ft. This highlights the rental premium paid for best-in-class space with the best sustainability ratings, we have seen a premium of 21% attached on Grade A BRREAM-rated Excellent and Outstanding buildings compared to unrated Grade A buildings.
The stronger occupier preferences for office space with sustainability credentials is reflected by the fact that 66% of space acquired so far this quarter has been in BREEAM-rated Excellent or Outstanding buildings. This is accentuated by a dwindling supply, evident in November where 68% of take-up was from spaces with ‘BREEAM’ excellent or outstanding credentials. However, only 17% of the newly added space achieved BREEAM excellent or above, highlighting a growing disparity between demand and available supply in highly sustainable office spaces.
Looking ahead, development completions from 2024 to 2027 are expected to reach 16.6 million sq ft, with 19% having already been pre-let. However, over half of the pipeline, constituting 52%, is yet to commence construction.
Despite the large amount of take-up this month, overall supply fell by 10 bps to 13.3m sq ft. Most of the space that has become available this month has been from small chunks in buildings, such as the 56th floor of 22 Bishopsgate, EC2. This meant vacancy rate fell to 9.5% from last month but is still 23% above the five-year average.