Occupiers in Central London’s office market seeking more value-for-money are driving leasing activity as the balance of power remains in their favour, according to research published today by global property consultants Cushman & Wakefield.
Central London take-up reached over 2.1 million sq ft in Q1 2013. This is significantly above take-up activity in Q1 2012, when 1.5 million sq ft was let, and for the second consecutive quarter is on a par with the 5-year quarterly average.
Google’s purchase of 800,000 sq ft of space at King’s Cross Central, for its new UK headquarters, boosted overall take-up and accounted for more than a third of space let during the quarter. Consequently, this deal contributed significantly to the West End’s Q1 2013 total take-up figure of just under 1.3 million sq ft; the area’s strongest start to the year since 2000 and more than 75% ahead of activity in Q1 2012.
The media and technology sector once again dominated West End activity and was responsible for 63% of transactions completed.
Guy Taylor, Head of West End Office Agency at Cushman & Wakefield, said: “Occupiers are increasingly broadening their search criteria in an effort to find perceived good value office accommodation. Larger occupiers, in particular, are taking the opportunity to drive a hard bargain and secure maximum value from landlords.”
In the City and Docklands, 815,000 sq ft of space was let in Q1 2013, which is a 13% uplift on Q1 2012. Occupiers in the City are using the opportunity to negotiate value from landlords and City buildings such as Cannon Place and Heron Tower, which have been on the market for some time, are now beginning to see increased leasing activity.
The most active market in the City is still the insurance market accounting for 18% of lettings, with both Liberty Mutual (51,000 sq ft) and Liberty Syndicate (66,321 sq ft) recently signing at 20 Fenchurch Street.
Under offer market ‘buoyant’
Central London’s deal pipeline looks promising with around 1.9 million sq ft currently under offer. This is broadly in line with the five-year quarterly average of 2 million sq ft.
The City leads the way for space under offer by a considerable margin with circa 1.6 million sq ft under offer compared to the West End’s 345,000 sq ft. Under offer volumes in the City are 40% ahead of the five-year quarterly average of around 1.1 million sq ft. In contrast, space under offer in the West End is 60% below the five-year quarterly average of 720,000 sq ft but this is primarily due to the Google transaction which has now completed.
Andrew Parker, Head of City Agency at Cushman & Wakefield, said: “The significant amount of space currently under offer in the City market is partly driven by landlords of buildings who have incurred substantial letting voids, being prepared to offer very attractive financial terms to secure perspective occupiers.”
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Central london deals TAKE-UP (by size)
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tenant
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Address
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size (SQ FT)
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area
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A Buildings, Kings Cross Central, N1
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Google
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800,000
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King Cross
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2-4 Cockspur Street, SW1
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Canadian Government
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69,125
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Mayfair St James’s
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20 Fenchurch Street, EC3
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Liberty Syndicate
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66,321
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City Core
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1 St Paul’s Churchyard, EC4
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Genesis Oil
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55,245
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City Core
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20 Fenchurch Street, EC3
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Liberty Mutual
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51,015
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City Core
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8-10 Great Pulteney Street, W1
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Creston Plc
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44,116
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Soho
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1 Stratford Place, E15
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Network Rail
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41,914
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Stratford
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123 Victoria Street, SW1
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John Lewis
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36,615
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Victoria
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20 Pilgrim Street, EC4
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Avanti group
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33,177
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City Core
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