Investment in Victoria has almost doubled in the past year, from £800m in 2013 to £1.5bn in 2014, while availability has more than halved over the same period.
According to new research from Tuckerman, the average deal size also doubled from £32m to £66m.
The leasing market also jumped by 12.5%, with a total of 881,993 sq ft of office space let over the year across 123 transactions.
Tuckerman – which acted on more than half of those transactions – said Victoria was one of the most dynamic and rapidly growing sub-markets in central London.
For lettings of more than 10,000 sq ft, almost half of all new tenants relocated from outside Victoria, although two-thirds of the new stock of this size in the area was taken by existing Victoria tenants.
The four largest lettings, covering 270,000 sq ft, were all to existing Victoria tenants.
Available office space has now more than halved, from 750,000 sq ft in early 2014 to 313,000 sq ft currently. However, the average floor plate size in Victoria has risen from almost 4,200 sq to 5,200 sq ft.
Tuckerman managing director Mark Fisher said: “The renaissance of Victoria, with the Land Securities Nova and Zig Zag schemes acting as a catalyst, is driving up rental value and transforming the area into one of central London’s most exciting markets. No longer perceived as the preserve of government and the civil service, Victoria is emerging as an vibrant destination with a compelling mix of retail, leisure and office facilities, supported by excellent transport links.
“This research highlights the loyalty of many existing occupiers towards Victoria, demonstrated by the volume prepared to pay a premium to remain in the area. The data also confirms our long-held belief in Victoria as an incubator location, enabling firms to thrive and grow without the need to relocate. Availability of small to medium sized stock is critical to enable the area to preserve its diversity as the market matures, and give businesses of all shapes and sizes the opportunity to call Victoria home.
“We envisage further loss of commercial stock to hotel and residential this year. Larger investment sales will also dominate the market as the institutions continue to move back into the Victoria market, encouraged by the increasing rents and infrastructure schemes reaching completion.”
