News

West End agents predict take-up

News

Nadia Elghamry

17 September 2011

Investment/finance, Offices, Residential, Retail

London

West End agents stick their necks on the line and predict where take–up will be by the year end and why

Simon Tann, DE&J Levy

“At the half-year point, 2011, West End take-up was 30% down on the same point last year (Source: LOD Data). We have just experienced the quietest August most of us can remember. I think it is therefore likely that 2011 take-up will fall well short of 2010, and be back to the 2009 level, at around 2.25m sq ft.”

Bill Page, Jones Lang LaSalle

“At H1 2011, 1.5m sq ft was let in the West End, 24% behind the first half of 2010, but around average. Our forecast for the full year is 3m sq ft, slightly below average. This modest forecast was principally due to subdued jobs growth expectations. Employment is expected to grow more strongly from 2012, although there is downside risk due to recent economic turbulence.”

Keith Harris, BNP Paribas Real Estate

“The strong second and third quarters of 2010 are not being repeated in 2011. As a result, annual take-up is likely to be comfortably below 3m sq ft. However, competition for space in the few new buildings is fierce. In the core, this will result in more deals in excess of £100 per sq ft being achieved before the year-end.”

Nicholas Thompson, Aukett Fitzroy Robinson

“Take-up by the year-end will be 4.1m sq ft. This is based on the supply side of the equation becoming more visible by the fourth quarter. There is a known shortage of available office space in the short term, which increases pressure on tenants to agree terms ahead of advancing rental levels. However, towards the end of the year, this pressure will abate as the supply side will become more visible into 2012 and beyond.”

“The figures include the 190,000 sq ft prelet taken by Aon at 122 Leadenhall, EC3, and Cameron McKenna taking 200,000 sq ft at Principle Place, E1. The two other recent prelets, by UBS and Bloomberg, were agreed in the later stages of 2010, which helped to boost take-up levels for Q4 last year.”

“If, as predicted, rents remain static, this will be the longest period of stagnant rental growth in the City since mid-2004 when rents remained at £44 per sq ft for 14 months.”

“With the completion of Cannon Place, EC4, ( 389,000 sq ft ) in Q3, grade A availability levels have increased marginally quarter-on-quarter and year-on-year.”

“At present, Soho, St James’s and North of Oxford Street (NOX) each have less than 50,000 sq ft of grade A space available. In fact, the current level of grade A space in NOX is at its lowest level for more than five years, with the majority of other sub-markets showing a low of just over two years.”

“Take-up has been boosted by a handful of larger deals in the West End this year, with Google, Camden council, NBC Universal and Double Negative all taking more than 50,000 sq ft of space.”

West End agents stick their necks on the line and predict where take-up will be by the year end and why Simon Tann, DE&J Levy “At the half-year point, 2011, West End take-up was 30% down on the same point last year (Source: LOD Data). We have just experienced the quietest August most of us can remember. I think it is therefore likely that 2011 take-up will fall well short of 2010, and be back to the 2009 level, at around 2.25m sq ft.” Bill Page, Jones Lang LaSalle “At H1 2011, 1.5m sq ft was let in the West End, 24% behind the first half of 2010, but around average. Our forecast for the full year is 3m sq ft, slightly below average. This modest forecast was principally due to subdued jobs growth expectations. Employment is expected to grow more strongly from 2012, although there is downside risk due to recent economic turbulence.” Keith Harris, BNP Paribas Real Estate “The strong second and third quarters of 2010 are not being repeated in 2011. As a result, annual take-up is likely to be comfortably below 3m sq ft. However, competition for space in the few new buildings is fierce. In the core, this will result in more deals in excess of £100 per sq ft being achieved before the year-end.” Nicholas Thompson, Aukett Fitzroy Robinson “Take-up by the year-end will be 4.1m sq ft. This is based on the supply side of the equation becoming more visible by the fourth quarter. There is a known shortage of available office space in the short term, which increases pressure on tenants to agree terms ahead of advancing rental levels. However, towards the end of the year, this pressure will abate as the supply side will become more visible into 2012 and beyond.” “The figures include the 190,000 sq ft prelet taken by Aon at 122 Leadenhall, EC3, and Cameron McKenna taking 200,000 sq ft at Principle Place, E1. The two other recent prelets, by UBS and Bloomberg, were agreed in the later stages of 2010, which helped to boost take-up levels for Q4 last year.” “If, as predicted, rents remain static, this will be the longest period of stagnant rental growth in the City since mid-2004 when rents remained at £44 per sq ft for 14 months.” “With the completion of Cannon Place, EC4, ( 389,000 sq ft ) in Q3, grade A availability levels have increased marginally quarter-on-quarter and year-on-year.” “At present, Soho, St James’s and North of Oxford Street (NOX) each have less than 50,000 sq ft of grade A space available. In fact, the current level of grade A space in NOX is at its lowest level for more than five years, with the majority of other sub-markets showing a low of just over two years.” “Take-up has been boosted by a handful of larger deals in the West End this year, with Google, Camden council, NBC Universal and Double Negative all taking more than 50,000 sq ft of space.”