Central London leasing for Q3 has shown significant year-on-year increases in the City and West End, while east London has declined sharply.
Cushman & Wakefield data shows Q1-Q3 take-up in 2017 was up 30% in the City and 32% in the West End, while east London leasing activity was down by 52%.
Total central London take-up for Q3 2017 stood at just over 3.2m sq ft, which brings the year-to-date total to 8.4m sq ft – a 23% increase on the previous year.
Richard Howard, head of central London agency at Cushman & Wakefield, said the fall to 317,429 sq ft in east London was largely down to a lack of availability.
Howard, who was part of the team that fully let Derwent London’s White Collar Factory on Old Street, EC1, said: “I wish Derwent had built four of them because I think we would have been very busy.”
Media and tech accounted for the largest proportion of Q3 activity (27%) but there was strong take-up from the banking and financial services sector (22%), primarily as a result of the prelet to Deutsche Bank at Landsec’s 21 Moorfields, EC3.
At 469,000 sq ft, the letting is the largest transaction to complete this year.
Boston Consulting Group’s deal to take 123,500 sq ft at Derwent London’s 80 Charlotte Street, W1, and Cancer Research UK’s decision to take around 110,000 sq ft at Lendlease and London & Continental Railway’s International Quarter London in Stratford, E15, demonstrate the depth of demand from different sectors.
Howard said top rents and 15-year leases were being maintained for new-builds. However, he said landlords were competing with more generous rent-frees and flexible leases to secure tenants for some buildings.
He said: “Rents have probably levelled off for the moment, but that post-Brexit feeling of Armageddon has just completely gone and it feels like it’s a very balanced marked with balanced demand versus available stock supported by some very large requirements.”
Serviced office take-up slowed down compared to the previous quarter, accounting for 325,000 sq ft of activity.
However, the year to date take-up was at 1.4m sq ft – a record year for the sector.
Key deals in the past three months have included WeWork’s purchase of 120 Moorgate (72,000 sq ft) and its 55,000 sq ft lease at 12 Hammersmith Grove, W6.
Howard said he doesn’t think WeWork and other serviced office providers are a short-term trend.
“If you’re Cushman & Wakefield and you want to rethink your offices, they will come in and redesign your office for you and will monitor everything so they will start to know you better than you know yourself.”
He said traditional landlords would need to adapt to compete with WeWork, while occupiers were having to make decisions more quickly to win office space that could feed WeWork’s rapid expansion plans.
Howard said uncertainty about the final Brexit deal was impacting some lease lengths, but on the whole it wasn’t a concern for many occupiers.
“We might think our government is a mess, but a lot of global corporate occupiers we speak to are more concerned about what’s going on at home,” he said.
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