Take-Up
Some 240,000 sq ft was let in Q4 in Docklands and, while that was significantly lower than Q3, it is nevertheless a healthy level of take-up in this sector of the market, particularly as it does not include any new-build space – all of this take-up was in the secondhand market. The total for the whole of 2011 is low at 640,000 sq ft, but 95% of that total occurred in the second half of the year.
The largest single transaction was 74,700 sq ft in Independent House, 191 Marsh Wall, where the occupier name and the terms of the transaction remain undisclosed but the asking rent was £15 per sq ft. It has been on the market since International News and Media vacated the building in 2009. In a second substantial deal, Telecity Redbus acquired 67,750 sq ft in 6 Harbour Exchange Square from Land Securities at a rent of £20 per sq ft until December 2014. Spanish Banking Group BBVA has taken 29,200 sq ft in One Canada Square.
There were two further deals of just under 20,000 sq ft which were 19,500 sq ft to Serviced Office Group in 5 Harbour Exchange Square and 19,100 sq ft in 40 Bank Street taken by security services company, G4S.
Supply
The supply of space to let has remained virtually unchanged in Q4 at 6.37m sq ft, just 3% lower than Q3. Most of it (4.9m sq ft) is being premarketed, with only just over 1m sq ft built and ready to occupy, and this figure has declined by 16% over the quarter.
Compared with Q4 2010, there has been a 16% fall in overall supply. The declines occurred in each category of supply although the change in new build was small whereas the other three – premarketed, secondhand and under-construction each fell by around 500,000 sq ft. There was 550,000 sq ft of space under construction a year ago and now there is none.
The largest units of newly-built space on the market are 205,000 sq ft at 30 North Colonnade and 157,580 sq ft at 5 Churchill Place. A further 91,400 sq ft of secondhand space is available in 25 Canada Square.
The most substantial development proposals being actively premarketed are North Quay – a cleared site just to the north of Canary Wharf, where 2.4m sq ft could be built; 1 Bank Street which has potential for 1.2m sq ft and 1 Park Place, which could also deliver over 1m sq ft.
Availability rate
The availability rate at Docklands dipped from 8.1% to 7.8% in Q4 as a result of the take-up of several sizeable secondhand units. This would generally be considered a sustainable and relatively healthy level of vacancy, although the historic tendency towards large units of supply and demand in Docklands means it is generally a volatile market. The range of secondhand lettings in this quarter, however, suggests a growing maturity.
Asking rents
The average asking rent for new-build space is unchanged in Q4 at £39.25 per sq ft. And for grade A secondhand space it is £33.75 per sq ft. The narrow range of average asking rents arises from the fact that there are large, high-quality secondhand units on the market in buildings such as 1 and 25 Canada Square.
Construction
No new development was initiated in Q4, nor in fact, in the whole of 2011. We had expected to see activity at 25 Canada Square by the year end, following the prelet to EMEA in Q3 but that has yet to happen.
Investment
There were no investment transactions in Docklands in Q4, nor any in Q2 or Q3. In fact, only one small property of 10,000 sq ft changed hands in the whole of 2011. This is in stark contrast to 2010, when 1.72m sq ft was sold in six separate transactions.
