Average prime West End rents in Q1 2017 were the highest since 2007, according to Savills
Q1 2017 average rents hit £122.30 per sq ft, 11% above the levels seen in 2016 and exceeding the previous quarterly high of £114.31 per sq ft set in Q4 2007, the advisory firm said.
A record rent of £190 per sq ft achieved in March at 5 St James’s Square, SW1, helped push the Q1 average prime rent to 11% above 2016’s average prime grade A rent of £110 per sq ft.
The average grade A rent in Q1 2017 hit £85 per sq ft, 10% above the 2016 Q1 average of £77
West End Q1 2017 take up reached 1.05m sq ft, 1% up on Q1 2016 and 10% above the 10-year average. The tech and media sector was the most active in the market, accounting for 22% of take up, followed by professional services (19%) and insurance and financial services (16%).
Savills said supply remains fairly stable, standing at 4.63m at the end of the quarter. This equates to a vacancy rate of 3.8%, its third month at this level.
Key deals include Conde Nast Publications acquiring the 9th floor, totalling 26,836 sq ft, at The Adelphi, WC2 on a 10 year lease at a rent of £79.50 and Aberdeen Asset Management‘s leasing at 12 Hammersmith Grove, W6, to Medidata, which acquired the top 9th and 10th floors totalling 29,106 sq ft at £59 per sq ft.
Brian Allen, director of the West End leasing team at Savills, said: “The first quarter of the year has seen strong take up and rental levels in the West End, with the deal at 5 St James‘s Square helping prime Grade A rents to hit a ten year high. Whilst headline rents remain strong, there is some upward pressure on the level of incentives being offered to tenants, with the average rent free period on a 10 year lease now 18 months, compared to the average of 13 months in Q1 2016. Nevertheless, the market remains robust.”
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