Take-up
| % +/- | % +/- | % +/- | ||
|---|---|---|---|---|
| Take-up (sq ft) | Q4 2012 | 24 months | 12 months | 3 months |
| New/refurb existing | 86,542 | 39 | -70 | -25 |
| Premarketing | 62,985 | n/a | n/a | n/a |
| Secondhand | 303,774 | -50 | -40 | -21 |
| Under construction | 165,151 | n/a | 85 | 430 |
| Total | 618,452 | -7 | -30 | 16 |
There was 618,500 sq ft let in Q4, a 16% improvement on the previous quarter but still significantly lower than the volume let in the same period in 2011. It takes the total for the year to 2.4m sq ft. That is significantly lower than the average annual rate of 3.2m sq ft achieved between 2005 and 2011. As we predicted in our last report, 2012 will go on record as a quiet year for the West End market.
The largest letting in Q4 was 59,500 sq ft let to Coca-Cola in the Wimpole Building, 1a Wimpole Street, W1, which is currently being refurbished. Coca-Cola is bringing part of its operation into the West End from west London in a move believed to be driven by the competitive recruitment market.
The second largest letting of Q4 was to financial and actuarial consultancy Lane Clark and Peacock, which also took a prelet, this time of 40,000 sq ft in 95 Wigmore Street, W1, at a rent reported as £77.50 per sq ft with 28.5 months rent-free. 95 Wigmore Street is a new development being undertaken by Great Portland Estates and Scottish Widows. It is scheduled for completion in June and this is the first letting in the building.
The highest rent believed to have been paid on a substantial unit this quarter was at 10 Portman Square, W1, where British Land is developing 123,250 sq ft for completion in the summer. Saudi Aramco has taken 24,900 sq ft at a rent rumoured to be over £90 per sq ft. There was also a unit of 24,500 sq ft in the same building prelet to Aspect Capital.
The most substantial letting to a business in the TMT sector this quarter was 17,275 sq ft in Ashdown House, 123 Victoria Street, SW1, let to accounting software provider Intuit.
Supply
| % +/- | % +/- | % +/- | ||
|---|---|---|---|---|
| Supply (sq ft) | Q4 2012 | 24 months | 12 months | 3 months |
| New/refurb existing | 869,600 | 39 | 57 | 86 |
| Premarketing | 1,298,467 | 4 | 97 | -9 |
| Secondhand | 2,616,726 | -44 | -18 | -3 |
| Under construction | 765,765 | -8 | -14 | -29 |
| Total | 5,550,558 | -24 | 5 | -2 |
There was 5.6m sq ft on the market at the end of Q4 2012, which was unchanged over the quarter. The amount of new space available increased by 86% over the quarter to 870,000 sq ft as developments were completed. There is 1.88m sq ft under construction, of which 310,000 sq ft is prelet and 770,000 sq ft is being actively marketed. Development activity has increased and the amount of development being actively marketed has risen by almost 30% over the past two years.
Park House, Park Street, W1, was completed in Q4 2012, which adds 163,000 sq ft of newly completed and ready-to-occupy space to the availability statistics. That makes it the largest single unit of new space available, followed by 139,600 sq ft in 1 Howick Place, SW1, which was also completed in Q4. There is still 103,50 sq ft available in Ashdown House, 123 Victoria Street, SW1, although there have been several lettings during the refurbishment process, and 96,375 sq ft remains in 5 Merchant Square, W2, which was completed in 2010 but is only 62% let.
Availability of secondhand space fell a little in Q4, but that follows a prolonged period of decline. The amount available is now 44% lower than two years ago, at 2.6m sq ft. Around 1.2m sq ft of the secondhand space on the market is classified as grade A and the largest unit within that is 36,600 in Carlton House, 11a Regent Street, SW1.
Availability rate
The availability rate was relatively stable, ending the year at 5.5%. It is the lowest rate of any of the sub-markets and highlights the extent of the supply constraint in the West End market. This has remained stable even though some large developments were completed in Q4.
Asking rents
The average asking rent for newly built space in the West End was £73.13 per sq ft at the end of Q4. The highest asking rent is still £110 per sq ft in 23 Savile Row, W1, where there is 25,850 sq ft on the market. There is a small unit at 25 Hanover Square, W1, being marketed at £100 per sq ft, but the highest rent for a larger unit is £79.50 per sq ft at AirW1.
The EGi Consensus rent survey put top rents in Mayfair/St James’s for a hypothetical 20,000 sq ft grade-A unit on a 10- year lease, at £99.50 per sq ft, unchanged from the previous quarter and with a rent-free period equivalent to 16 months.
Construction
Some 250,000 sq ft of new development started on site in Q4, taking construction starts for the whole of 2012 to 1.21m sq ft. The largest scheme to start in Q4 was the refurbishment of 1 Page Street, SW1, which has already been prelet to Burberry. That leaves 120,000 sq ft of speculative development put under construction in Q4 in four refurbishments – 42,600 sq ft in Summit House, 15-29 Praed Street, W2, and 30,000 sq ft in 25-30 North Row, W1, another 30,000 sq ft in St James’s House, 23 King Street, SW1, and 20,000 sq ft in Trafalgar House, 11 Waterloo Place, SW1.
Investment
There were 25 investment transactions in Q4, totalling 910,000 sq ft, taking the total for the year to 2.55m sq ft in 92 transactions.
The largest building sold in the quarter was the 184,720 sq ft Hobart House, 40 Grosvenor Place, SW1, sold by the Grosvenor Estate to the National Pension Service for Korea for £107m. The highest priced transaction was 74-85 St James’s Street, SW1, a building of 124,000 sq ft sold by RREEF to the State Oil Fund of Azerbaijan for £177m.
Clarges House, Clarges Street, W1, was sold for £150m. The building is just 33,600 sq ft and was sold at a yield of 4.4% by Warnford Investments to British Land.
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