Savills Research
UK Commercial
West End Office
Market Watch
The vacancy rate has risen above 3% for the
first time since November 2015
May 2016
GRAPH 1
12 Month Rolling Take-up
Supply and demand
snapshot
n April saw take-up of 235,949 sq
ft across 36 transactions, with an
average transaction size of 6,554 sq ft.
n This brought the year-to-date takeup total to 1.28m sq ft, which is 3%
above this point in 2015 and 10%
above the long-term average.
n The 12 month rolling take-up in the
West End is 4.39m sq ft, 21% above
the long-term average (graph 1).
n As is traditional in the West End,
take-up in 2016 has predominantly
been made up of smaller transactions,
with 71% of transactions completed so
far this year being below 10,000 sq ft
and only 4% above 50,000 sq ft (graph
2). However, inflated by larger lettings,
the average transactions size so far
this year is 10,365 sq ft
n The largest transaction to complete
in April was Tata’s acquisition of the
5th floor at Northcliffe House, 2 Derry
Street, totalling 32,205 sq ft. The Indian
conglomerate have signed a seven
year lease at a rent of £46.00 per sq ft.
n Another notable transaction saw
Savills dispose of the Ground and
1st floors at 20 Triton Street, totalling
31,589 sq ft on behalf of LendLease.
The lease was assigned to Dentsu
Aegis Network with the terms
confidential.
n Tech & Media firms were the most
active in April accounting for 26% of
total monthly take-up, followed by
Insurance & Financial Services (19%)
and Extraction & Utilities (16%).
n Supply at the end of April stood at
3.72m sq ft, with 77% of a Grade A
standard. This is a 2% decrease on the
3.8m sq ft of supply available at this
point last year but a 2% increase on
the 3.63m sq ft available at the end of
April 2015.
Source: Savills Research
GRAPH 2
Number of transactions by size band
n This has resulted in the vacancy
rate rising to 3.1%, the first time it has
exceeded 3% since November 2015.
n 549,864 sq ft of supply is currently
under-offer, which is 8% below
the long-term average. However,
226,657 sq ft went under-offer in
April compared to just 90,627 sq ft in
March.
n The highest recorded rent in April
was £110.00 per sq ft. The transaction
saw Aksia Europe acquire the 1st floor
at 55 St James's Street totalling 2,297
sq ft on a 10 year lease.
n The average Grade A rent in April
was £72.37 per sq ft. Boosted by
several transactions completing in
Mayfair, the average Grade B rent was
£65.43 per sq ft.
Source: Savills Research
TABLE 1
Key April Stats
Stats
Monthly change
Take-up
235,949 sq ft

Supply
3,720,044 sq ft
Vacancy Rate
3.1%


Avg Grade A
Rent (psf)
£72.37/sq ft

2,184,500 sq ft

Demand
Source: Savills Research
savills.co.uk/research
01
Market Watch | West End offices
Analysis close up
Table 3
Table 2
Supply
Take-up
Month
Year to date
Sq ft
Sq ft
% change
on previous
year
% change
on average
Total
% Grade A
% chg on
prev mnth
Vacancy
rate (%)
May-15
249,162
1,483,991
-10%
15%
4,228,468
71%
11.3%
3.5%
Jun-15
672,597
2,156,588
9%
30%
3,407,189
79%
-19.4%
2.7%
Jul-15
226,312
2,382,900
4%
27%
3,074,790
80%
-9.8%
2.5%
Aug-15
351,747
2,734,647
0%
31%
3,329,207
82%
8.3%
2.8%
Sep-15
466,423
3,201,070
2%
26%
3,285,428
80%
-1.3%
2.7%
Oct-15
366,528
3,567,598
7%
28%
3,738,104
83%
13.8%
3.0%
Nov-15
389,101
3,956,699
10%
32%
3,762,519
81%
0.7%
3.1%
Dec-15
386,653
4,343,352
5%
28%
3,613,235
81%
-4.0%
3.0%
Jan-16
287,344
289,633
-19%
-19%
3,732,946
80%
3.3%
3.0%
Feb-16
295,302
582,646
-17%
-17%
3,644,913
75%
-2.4%
3.0%
Mar-16
459,201
1,041,847
10%
11%
3,632,917
77%
-0.3%
3.0%
Apr-16
235,949
1,277,796
3%
10%
3,720,044
77%
2.4%
3.1%
Table 4
Table 5
Rents
Demand & Under Offers
Average
£ per sq ft
Top
Grade A
Grade B
WE Potential demand (sq ft)
Rent
free**
Prime*
639,000
WE Active demand (sq ft)
1,545,500
WE Total demand (sq ft)
2,184,500
May-15
£97.80
£64.65
£37.00
Jun-15
£102.50
£70.93
£59.36
£96.58
7
Jul-15
£109.80
£72.99
£57.95
-
-
Aug-15
£97.75
£67.70
£59.75
-
-
Sep-15
£147.50
£75.67
£57.28
£106.91
9
% change on ave
-8%
Oct-15
£110.00
£81.30
£59.33
-
-
Landlord controlled supply
82%
Nov-15
£120.00
£77.01
£49.43
-
-
Tenant controlled supply
18%
Dec-15
£157.00
£86.09
£58.37
£104.90
11
Jan-16
£132.50
£77.56
£56.50
-
-
Feb-16
£110.00
£78.91
£49.39
-
-
Mar-16
£117.37
£71.91
£53.71
£110.34
10
Apr-16
£90.00
£72.37
£65.43
-
-
% change on 12 month ave
-16%
Total under offer (sq ft)
549,864
Under offer this month (sq ft)
226,657
Table 6
Development pipeline
Sq ft
Refurb
Devs
Total
% Pre-let
2016
276,000
2,298,000
2,574,000
27%
2017
428,000
1,624,000
2,052,000
41%
2018
345,000
1,964,000
2,309,000
11%
2019
202,000
1,132,000
1,335,000
0%
Total
1,251,000
7,018,000
8,270,000
Completions due in the next 6 months are included in the supply figures
02
22%
*Average prime rents for preceeding 3 months ** Average rent free on leases of 5 years for preceeding 3 months
Market Watch | West End offices
Table 7
Significant April transactions
Address
Floor/s
Sq ft
Grade
Northcliffe House, 2 Derry
Street, W8
5
32,205
B
20 Triton Street, NW1
G,1
31,589
White Building, 11 Evesham
Street, W11
2
12 St. James's Square, SW1
Achieved
rent
Tenant
Lessor
£46.00
Tata
Sirosa
A
Confidential
Dentsu Aegis Network
LendLease (assignment)
12,303
A
£45.00
Jaeger
Nottingdale Estates
4
11,974
B
Confidential
Smiths Group
Marble Bar Asset Management
(assignment)
Stratton House, 5 Stratton
Street, W1
6
11,104
B
£56.00
Pictet Asset Management
Sirosa
234 Kings Road, SW3
2
9,117
B
£40.08
Innovative Aged Care
Metro Bank (sub-lease)
84 Wimpole Street, W1
Bldg
7,716
A
£88.12
IVI UK
Howard de Walden Estates
55 St. James's Street, SW1
1
2,297
A
£110.00
Aksia Europe
Lothbury Investment Management
Table 8
Significant supply
Address
Floor/s
Sq ft
Grade
Quoting
rent
Nova South, SW1
2-7,9-11
221,482
A
NQ
Verde, SW1
pt1,2-5,p6,7-8
220,520
A
Adelphi, 1-11 John Adam Street,
WC2
5-11
186,759
Nova North, SW1
2-11
12 Hammersmith Grove, W6
Lessor
U/O
Land Securities / CPP
10
£75.00+
Tishman Speyer
8
A
£79.50+
Blackstone
184,000
A
NQ
1-10
165,000
A
£55.00+
Aberdeen Asset
Management
Portland House, SW1
p3,p5-p9,12-14,
p15,p20-21,22-26
127,728
B
NQ
Land Securities
LSQ, WC2
2-8
92,900
A
£85.00
Old Park Lane
30 Broadwick Street, W1
G-6
87,000
A
NQ
Great Portland Estates
St James's Market Building 2, SW1 G-7
67,809
A
NQ
The Crown Estate /
Oxford Properties
Beckett House, Lambeth Palace
Road, SE1
1-5
60,910
B
NQ
Guys & St Thomas Charitable
Foundation
1 New Burlington Place, W1
1-2,4-5
56,055
A
£130.00
The Crown Estate /
Exemplar
1 Welbeck Street, W1
LG-7
53,841
A
£90.00
Lazari
49,120
A
NQ
St James's Market Building 1, SW1 2-3
03
Land Securities / CPP
The Crown Estate /
Oxford Properties
8-11
p5,p9,p21,24-26
3
5
Market Watch | West End offices
Map 1
Savills West End office submarkets
Please contact us for further information
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Research
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