MORNING NEWS: Prime London office vacancy rates nudge zero

Good morning. Here’s your daily round-up of the latest news and views from EG and a collection of industry-relevant headlines from the nationals, all perfectly curated to set you up for the day ahead. Vacancy rates for new office stock across the capital’s most sought-after submarkets have reached their lowest levels since records began. Availability in newly constructed buildings has fallen to 0.3% in the West End core of Mayfair and St James’s, and 0.5% in the City of London, according to research by Knight Frank. This works out as just 379,394 sq ft of availability, which would be consumed within eight months, based on current average take-up figures for new space. Philip Hobley, head of London offices at Knight Frank, said: “The lack of available prime space means that companies are securing future office requirements further ahead of time, given competition in locations where vacancy is at historically low levels.” He added: “A sizeable proportion of the lease expiries in the coming years is for space within older office buildings lacking what modern occupiers want, which means that the market will further bifurcate.” Total vacancy across all grades of office space is 9%, found Knight Frank. Legal & General and Dutch pension fund PGGM are preparing to bring their long leasehold in a City office block back to market, after attempts to sell the asset fell through earlier this year. Art-Invest had been lined up to buy Senator House for around £70m at the beginning of the year, but the deal never closed.  The pair will now try again at a reduced price tag of £70m for the six-storey, 192,566 sq ft, grade-A office building at 85 Queen Victoria Street, EC4. Elsewhere in the City, Japanese investor Obayashi Corporation and developer Sellar look set to get the go-ahead for a 37-storey, 560,000 sq ft office tower at 60 Gracechurch Street, EC3. The scheme, which will replace an existing nine-storey block, has received numerous objections, including from Historic England, Historic Royal Palaces and the London Borough of Tower Hamlets relating to the potential impact on local heritage. In the West End, acquisitive Derwent has bought its joint venture partner Lazari out of 50 Baker Street, W1, for £44.4m. The group said it had made the decision to take full ownership off the back of the success of its nearby 25 Baker Street. Chief executive Paul Williams said: “West End vacancy remains low and demand from high-quality occupiers across a broad range of business sectors continues to outpace supply. Underpinned by our confidence that the property cycle has inflected, we believe now is the time to acquire well-located regeneration opportunities. Plus, demand for hotels continues to grow with KKR and Baupost teaming up to take 33 Marriott hotels off the hands of ADIA in a rumoured £900m deal, while RE Capital is hoping to cash in on its recently opened Farringdon hotel, the Ruby Stella, putting it up for sale through Savills with a £50m price tag. All of the news from EG, plus a selection of headlines from the nationals:Derwent buys Lazari out of Baker Street projectPRS REIT opens dataroom as buyers circleAlternative REIT buys Hertfordshire beauty schoolFarringdon hotel up for sale for £50m ADIA sells UK Marriotts in £900m dealVacancy rates near zero for new prime London officesKier gets nod for fresh Arena Central plansAvant’s 396-home Pleasely plans go inTwo new tenants splash out at Blue FinPioneer’s asset management boss heads to LongfellowCOMMENT: Digital infrastructure – asset hype or the foundations of the future?CBRE appoints new head of operational real estateL&G and PGGM prepare for Senator House market returnObayashi and Sellar’s City tower set for approvalIndigoScott gets backing for Wimbledon resi schemeFisher German grows London office agency team with CWG hireBerkeley Estate’s Barbican office revamp tipped for approvalMontagu Evans appointed on Scotland’s first Center Parcs siteKadans eyes approval for the next phase of Tileyard QuarterGo Outdoors sets up camp at Manchester ArndaleArt and design school signs at Manchester’s Bridgewater HouseNatwest backs Melburg’s Yorkshire logistics investmentsBritish Land plans Glasgow Fort retail park expansionBlackstone adds auditorium to new London HQManchester’s Upper Brook Street site changes hands as part of £436m regenNational deals round-upEdinburgh’s £2bn West Town masterplan lined up for approvalHUB and HIG bag final Elephant Park site for £42mLiverpool Council buys stalled Chinatown development siteCo-working start-up founded by Lord Cameron ally on brink of collapse (£)Retail spending falls as consumers hold on for the sales (£)Housebuilders will come ‘nowhere near’ 1.5m homes target (£)House prices show biggest monthly rise in almost three years (£)Investors call for reform of Scotland’s ‘stamp duty’ to boost investment (£)Second homeowner exodus begins in Leicester (£)Housebuilders suffer £500m slump over Budget and cladding fears (£)