Quiet times: With deals small and markets struggling, there needs to be a sustained period of activity if this quarter’s take-up is to match last year’s.
The subdued level of activity from the third quarter has continued into this quarter, with take-up falling short of previous levels. So far, only 90 deals have been completed, totalling 793,886 sq ft, compared with 906,419 sq ft taken over 168 deals from this time last year.
With a total of 4.3m sq ft being let in Q3, and more than 5m sq ft in Q4 2006, a lot of activity is needed in the final weeks of this year to boost take-up to those levels.
The largest deal so far in Q4 is the City core letting of 120,000 sq ft at One New Change, EC4, to lawyer Kirkpatrick & Lockhart Preston Gates Ellis. Other than this, there has been no deal of more than 100,000 sq ft. The second-largest deal was the 75,920 sq ft Midtown letting at Princeton House, WC1, to an undisclosed tenant.
Midtown has seen average take-up levels, when compared with both Q3 and this time last year, with 204,156 sq ft being let across 13 deals. Other than the letting at Princeton House, deals have been relatively small, with the second-largest letting a mere 33,000 sq ft to OC&C Strategy Consultants at 6 New Street Square, EC4.
Core City take-up has been lacklustre, with 264,018 sq ft being let so far this quarter. Last year’s take-up of 1.3m sq ft in Q3 and 1.45m sq ft in Q4 set somewhat unrealistic targets for the remainder of this quarter. The largest deal, other than the letting at One New Change, was the 45,313 sq ft letting to Fidessa at 1 Old Jewry, EC2.
The West End market has seen very poor levels of activity so far in Q4, down by 69% on this stage last quarter, with only 218,823 sq ft being let over 26 deals. The largest transaction was the 58,911 sq ft letting to the House of Commons at 14 Tothill Street, SW1, where the building has recently been put up for sale.
Docklands dip
Hardest hit and a major contributor to poor take-up levels is Docklands, where only one deal has been completed so far in Q4 – the 2,045 sq ft letting at One Canada Square, E14, to Van der Moolen Equities.
The previously high take-up levels of Q2, which plummeted by 78% last quarter, seem likely to remain low. The limited amount of available existing stock, alongside only 35,976 sq ft going under offer in Q4, means that take-up levels are unlikely to be bolstered by a late flurry of deals.
Most markets appear to be suffering and a lot of activity will have to occur before the end of the year to boost take-up figures – 2.3m sq ft of space is due to go under construction this quarter, 77% of which is still available.
However, there has been 2.2m sq ft of space placed under offer since the beginning of Q3, 43% in this quarter. If a large proportion of these deals is completed, the take-up figures for this quarter will strengthen.
