Aviva Investors has agreed a £120 per sq ft office letting in Hanover Square, W1, as the West End experiences a spike in rents above the £100 per sq ft threshold.
The landlord’s 11 Hanover Square redevelopment will become home to wealth management company Summit Advisers, advised by Edward Charles. It is leasing the three upper floors on a 10 year lease at the building, where the letting agents are Cushman & Wakefield and CBRE. The deal spans 12,000 sq ft.
Separately, asset manager Alphadyne has taken a 2,000 sq ft office at the same rent of £120 per sq ft.
According to EG data, 2017 is set to be a record-breaking year for £100 per sq ft plus rents in the West End. In the year to date, more than 36 deals have either been signed above £100 per sq ft. That is equal to the whole of 2016, and significantly above 2008, when 28 such deals signed.
Earlier this month, Indian natural resources firm Vedanta broke the Mayfair record rent by taking 8,000 sq ft on one of the upper floors in Mercury Group’s 30 Berkeley Square, W1 (main picture). The rent proposed there was £135 per sq ft.
Before becoming more commonplace, lettings above £100 per sq ft were viewed in the market as a barometer for West End demand. After 2002, when Lazard signed its 70,000 sq ft lease at Mayfair Place, 50 Stratton Street, there was a four year hiatus until four further £100 per sq ft plus deals were signed. They then peaked in 2008, before dropping off until 2014 (see graph).
These top-end rents have historically clustered around squares in Mayfair and St James’s, although Kames Capital is understood last year to have agreed a £108 per sq ft rent at 122 Leadenhall Street, otherwise known as the Cheesegrater.
Simon Knights, head of West End agency at Strutt & Parker, said: “People talk about lack of supply, but a better measure is how much demand is out there. These are international companies that you can’t pin down to one business sector, unlike the City of London. These businesses are only going to take a really top end building to go with there image. They think in terms of global rent rather than pounds per square foot.”
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