Source: Savills Research
Vacancy rate begins to rise as next year's schemes get added to supply.
Supply and demand snapshot
■ Take-up for October was 304,291 sq ft in 30 transactions, bringing the year-to-date take-up to 6,119,399 sq ft. This is 13% down on this point last year, but already 18% up on the long term annual average with two months remaining. 85% of all transactions have been of a Grade A standard.
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TABLE 1Key October stats
■ The 12-month rolling take-up figure stood at 7.3m sq ft for the end of October, which is the lowest it has been since December 2013, but still 50% above the long-term average (Graph 1).
■ The largest deal of the month was the acquisition of the 1st and 2nd floors of The Warehouse at The Bower, EC1 (37,652 sq ft) by an unnamed tenant.
■ Another notable deal was the acquisition of the 2nd floor totalling 33,406 sq ft at Farringdon Place, EC1 by Moo Print on a 10-year lease.
■ At the end of October, the Professional services sector has accounted for 21% of total take-up, Insurance & Financial services 18%, Tech & Media occupiers12%, Serviced Office Providers 11%, with the Banking sector accounting for 6% (Graph 1).
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GRAPH 1City take-up by business sector
NB 2015 data accurate to end of October
Source: Savills Research
■ Total supply at the end of October stood at 5.9m sq ft producing a vacancy rate of 4.7%. However, there is currently 1.2m sq ft of current space under-offer.
■ 52% of current supply is situated within the City Core, with EC2 accounting for 27% of total supply. 88% of current City supply is grade A.
■ The slight rise in the vacancy rate is due to the introduction of Q2 2016 developments and refurbishments to the supply statistics. This included schemes such as Lacon House, WC1 (208,035 sq ft), The Monument Building, EC3 (92,689 sq ft), and Herbal House, EC1 (110,867 sq ft).
■ The highest rent achieved in October was £70.00/sq ft at 125 Wood Street, EC2. Law firm Milbank Tweed Hadley & McCloy acquired the 5th and 8th floors totalling 13,313 sq ft.
■ We anticipate approximately 13.2m sq ft of new space will be delivered over the next 3 years, of which 9.1m sq ft is speculative, and 4.1m sq ft is already pre-let (Graph 2).
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GRAPH 2City supply pipeline
Source: Savills Research
Analysis close up
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TABLE 2Monthly take-up
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TABLE 3Year-to-date take-up
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TABLE 4Rents
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TABLE 5Supply
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TABLE 6Development pipeline
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TABLE 7Demand & under offers
Completions due in the next six months are included in the supply figures
* Average prime rents for preceeding three months
** Average rent free on leases of 10 years with no breaks for preceeding three months
N.B We have amended our historic stock figure, resulting in a slight change of our historic vacancy rates (Aug 2015)
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TABLE 8Significant October transactions
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TABLE 9Significant supply
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MAP 1Savills City Office Market Area
Source: Savills Research