Contents

• Across the City market

• Across the West End market

Across the City market

Take-up in September reached 676,115 sq ft, bringing the total for the first three quarters of the year to 4.4m – up 6% on last year but down 3% on the long-term average. September take-up was driven by two law firms taking over 70,000 sq ft of space. Watson Farley & Williams signed at 25 Moorgate Street, EC2, a refurb and extend project which is due to complete in 2025. The law firm is moving from 15 Appold Street, EC2, where it has been for almost 20 years – this is a continuation of a trend we have seen over the last few years whereby law firms have relocated from long-standing headquarters to best-in-class space in order to attract and retain top talent.

The current vacancy rate in the city sits at 8.8% – this is 20 basis points down on Q2 of this year and 110 basis points down on Q3 last year. This is, in part, due to the reduction in tenant-controlled space on the market; tenant space currently sits at the lowest level since May 2020. During the quarter, we saw tenant-controlled space reduce by a further 327,000 sq ft – almost half (159,000 sq ft) was withdrawn. The other half was acquired, with September seeing 108,917 sq ft of tenant release space taken – a 33% increase compared to the average monthly take-up this year. Notably, 96% of this space was Grade A.

September also saw the largest rent ever achieved in the city, with Banco Master taking the top office floor of 22 Bishopsgate, EC2, at £122 per sq ft. This is a prime example of the rental growth we are currently seeing in the city for best-in-class space.

Looking forward to Q4 and beyond, if the aforementioned level of rental growth continues, it becomes inevitable that development for best-in-class buildings becomes more viable and we see more construction begin to take place. At present, we are expecting 17.3m sq ft of completions until 2028, of which, 22% is already pre-let, with over half of these schemes (57%) located in the city core.

City Highlights

Across the West End market

September saw the highest monthly level of take-up we have seen so far this year in the West End at 466,164 sq ft, bringing the year-to-date total to 2.4m sq ft. This reflects an 8% increase on the same period last year - a positive shift from the first half of the year in which take-up levels had been significantly trailing 2023’s figure. However, it still remains down 22% relative to the ten-year average.

Similar to July’s high figure, take-up this month received an uplift from a significant pre-let: Evercore’s acquisition of 135,000 sq ft at Welput’s 105 Victoria Street development, SW1. Not only was this the second-largest transaction so far this year, but it is also the largest we have recorded in the Victoria submarket in almost 20 years. While the rent is confidential, it is expected to be well over £100 per sq ft overall, a level that as recently as a few years ago was only usually achieved in the core submarkets of Mayfair and St James’s. However, persistent levels of constrained supply in these markets have forced occupiers such as Evercore (who are relocating from Mayfair) to look further afield, which has, in turn, led to submarkets like Soho and North of Oxford Street and, more recently, Covent Garden consistently seeing rents over £100 per sq ft.

While the Financial Services sector is still responsible for the largest share of take-up at 27%, sector demand has been more diverse than in 2022 or 2023, when financial firms made up 39% and 40%, respectively. Unusually for the West End, Professional Services was the second largest sector on 12%, although this was heavily skewed by BDO’s pre-let of 221,403 sq ft at Ramsbury & Capital Real Estate’s M Building in July. The Tech & Media sector followed, although it continues to see subdued levels of take-up in line with the level of demand we saw from the sector last year. Of note has been the strong performance of the Extraction & Utilities sector, which has acquired 173,738 sq ft in the first three quarters of the year – the highest quantity in a decade, and up 108% on the ten-year average.

Encouragingly, the vacancy rate fell 30 basis points to 7.4%, following an active quarter of leasing and a relatively small quantum of speculative space (73,796 sq ft) added from pipeline, in comparison to the 643,341 sq ft that was added at the end of Q2.

Looking ahead, although pipeline completions are currently expected to be 16% higher in 2025 than in 2024, 28% has already been pre-let, with a further 4% under offer. Furthermore, almost a fifth of the speculative space due in 2025 is at Yoo Capital’s One Olympia development

West End Highlights

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