Take-up of commercial property in central London reached 1.5m sq ft in December, bringing the year-to-date total to 14.2m sq ft, according to research out today from DTZ.
The annual figure is 18% up on the 12 month total for 2013. Additionally, the 2014 total is above the pre-recession (2004-2008) average of 13.3m sq ft pa, and considerably higher than the post-recession average (2009-2013) of 11m sq ft.
Companies in the growing professional (29%) and tech, creative & new media sectors (27%) took the largest share of office space in 2014. Companies within the insurance & finance sector – many of which upgraded their central London HQs in 2014 – took 26%. Between them, these sectors acquired 10.3m sq ft.
There were year-on-year take-up increases in five out of six central London submarkets. Docklands saw the biggest increase in take-up, 1.2m sq ft transacted in 2014 (compared to 540,000 sq ft in 2013). Year-to-date take-up in the West End and Midtown reached 2.5m sq ft and 1.2m sq ft respectively (the same figures last year were 2m sq ft and 900,000 sq ft).
The City continued to be the most active market, with 6m sq ft let in 2014, compared to 5.4m sq ft in 2013. The only submarket to see a year-on-year fall in take-up was the North and West fringe (with annual lettings of 1.3m sq ft, compared to 1.6m sq ft last year).
There were seven transactions over 40,000 sq ft in December, the largest saw Google take 202,000 sq ft at 6 Pancras Square in King’s Cross. The next largest saw Coworking providers WeWork and Neuehouse each take 63,000 sq ft (at 199 Bishopsgate, EC2 and The Adelphi Building, WC2 respectively).
Central London availability in December 2014 was 9.5m sq ft, a slight decrease on the previous month, 28% down on the same period last year, and the lowest level recorded since 2001. Availability of new and newly refurbished offices is declining less rapidly, having fallen 18% year-on-year (to 4.7m sq ft).
All six central London submarkets saw year-on-year falls in availability. The biggest decrease was in the North and West fringe (which includes King’s Cross, where there have been a number of large pre-lets). Here, availability fell by 38% to 360,000 sq ft. Availability has fallen by 35% in the City (to 3.8m sq ft), 30% in the West End (to 1.9m sq ft), and 25% in Docklands (to 1.2m sq ft).
The amount of floor space under offer decreased in December 2014 (to 2.5m sq ft, from 3.2m sq ft in the previous month) but remained at around five year average levels. There are five 50,000 sq ft plus units under offer at present.
The largest units under offer include 160 Aldersgate Street, EC1 where law firm DLA Piper is negotiating on 202,000 sq ft, 30 Gresham Street, EC2 where Investec is in negotiations to take 61,000 sq ft, and 2 London Wall Place, EC2, 60,000 sq ft of which is under offer to Cleary Gottlieb Steen & Hamilton.
Sophy Moffat, DTZ’s Senior Analyst, Central London Agency & Investment, said: “The recovery in the UK economy combined with low levels of development means the balance between demand and supply is now swinging in favour of landlords. As competition for space increases, rents will continue to rise.”
