News

Last word: West End’s star performance

News

Victoria Bajela, head of london offices research, EGi

13 February 2016

Offices

England, London

Despite being the most constrained market in central London and having the lowest availability rate of all the central London submarkets, we saw the highest levels of quarterly take-up for the West End for 12 years. A whopping 1.4m sq ft of space was taken, up on the five-year quarterly average by 109%.

Even if we excluded the two largest deals from this total, the Facebook letting at Rathbone Square, W1, and Cleveland Clinic at 33 Grosvenor Square, W1, we are still looking at the highest take-up since 2007.

The strength of lettings in the West End wasn’t just about mega-deals delivering sq ft; it was also about the number of lettings that took place. In the final quarter of 2015, we saw the highest number of deals transacted so far in a Q4 and over the last three quarters of the year, we saw deal numbers in or around the 140 mark, quarterly volumes not seen since 2007. Annually, deal volumes in the West End were up too, with 500 deals completing – that’s 120 more deals done than in the year before.

But back to Q4, and what really underpinned take-up is preletting. Perhaps this is to be expected, considering strong lettings activity and low availability, but the amount is surprising.

Here, another record was broken. We saw the highest amount of preletting in the West End in Q4 than in any other quarter since our records began. Just shy of 400,000 sq ft was prelet – that’s about 30% of overall West End take-up, and overtakes the previous title holder Q1 2007 by 72,000 sq ft.

Again, if we look at 2015 as a whole, preletting activity was also up on the previous year with 511,000 sq ft, the third-highest annual prelettings we have on our records.

With occupiers struggling to find space that meets office requirements in the West End, prelettings provide a way forward for those wanting to secure larger spaces. For now, they seem undaunted by rising West End rents. Can records continue to be broken? We think so, and there are sure to be many more prelets in 2016, making up more than a quarter of space now under offer.

With two mega-deals, a doubling of the sq ft of lettings in Q4 compared to the previous quarter, and the highest levels of take-up in 12 years, one market outshone all others at the end of last year: the West End. Despite being the most constrained market in central London and having the lowest availability rate of all the central London submarkets, we saw the highest levels of quarterly take-up for the West End for 12 years. A whopping 1.4m sq ft of space was taken, up on the five-year quarterly average by 109%. Even if we excluded the two largest deals from this total, the Facebook letting at Rathbone Square, W1, and Cleveland Clinic at 33 Grosvenor Square, W1, we are still looking at the highest take-up since 2007. The strength of lettings in the West End wasn’t just about mega-deals delivering sq ft; it was also about the number of lettings that took place. In the final quarter of 2015, we saw the highest number of deals transacted so far in a Q4 and over the last three quarters of the year, we saw deal numbers in or around the 140 mark, quarterly volumes not seen since 2007. Annually, deal volumes in the West End were up too, with 500 deals completing – that’s 120 more deals done than in the year before. But back to Q4, and what really underpinned take-up is preletting. Perhaps this is to be expected, considering strong lettings activity and low availability, but the amount is surprising. Here, another record was broken. We saw the highest amount of preletting in the West End in Q4 than in any other quarter since our records began. Just shy of 400,000 sq ft was prelet – that’s about 30% of overall West End take-up, and overtakes the previous title holder Q1 2007 by 72,000 sq ft. Again, if we look at 2015 as a whole, preletting activity was also up on the previous year with 511,000 sq ft, the third-highest annual prelettings we have on our records. With occupiers struggling to find space that meets office requirements in the West End, prelettings provide a way forward for those wanting to secure larger spaces. For now, they seem undaunted by rising West End rents. Can records continue to be broken? We think so, and there are sure to be many more prelets in 2016, making up more than a quarter of space now under offer.