Central London offices saw a fall in take-up in Q1 2012 but the absorption of space has continued to be positive, with vacancy rates steady or falling, according to Colliers International.
Media occupiers such as UBM and Ogilvy & Mather remain the most active, with non-core locations such as the South Bank and King’s Cross attracting the most interest.
Overall vacancy has fallen to 6.6% for Central London as a whole, with Grade A vacancy now 9.6% in the City and 5.2% in the West End, according to Colliers’ Central London Offices review.
Research and forecasting director Guy Grantham said: “There is a significant number of 100,000 sq ft requirements which are in advanced stages of discussions and shortlisting.
“Tenants with major space requirements are focusing attention on schemes in established non-core locations on account of the lack of current supply in core markets. We anticipate a strong upward movement in transaction levels in the second half of 2012 centred on these non-core locations.”
Colliers’ head of West End offices, Craig Satchwell, said 2012 had started well in the West End with take-up over 1m sq ft and 2% above the 10-year average.
“There has been continued pre-letting activity in the West End, with Q1 2012 deals to Burberry, Jimmy Choo and Belstaff totalling over 150,000 sq ft,” he said. “Nevertheless, total Central London quarterly take-up fell to its lowest level for nearly three years. Quarterly take-up was 2.2m sq ft compared to the 10-year quarterly average of 2.8m sq ft.
“West End headline rents are at £97.50 per sq ft with expectation of further rental rises over the next six months as competition for newly delivered product in core locations helps to generate uplift.”
New supply remains severely constrained in the City, with no new completed development space coming to market during Q1 2012 and in the West End, just 46,123 sq ft of speculative space at 5 Hanover Square, W1, which is already appearing on a number of tenant shortlists. The major completion for the first half will be The Shard (593,000 sq ft), which is expected to attract West End occupiers.
jack.sidders@estatesgazette.com
