Source: Savills Research
Above average January take-up kicks off 2016
■ Take-up for January was 428,373 sq ft, which is 30% down on January last year. 80% of all January transactions were of a Grade A standard.
■ This has brought the 12-month rolling take-up figure to 7.3m sq ft, which is still 49% up on the long-term average.
■ Despite the January take-up being down on last year, it is still 23% up on the 10-year average January take-up amount. Furthermore, with 45 transactions happening last month, this was 55% up on the 10-year average transaction amount for January.
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TABLE 1Key January stats
■ The largest deal of the month was the acquisition of the LG, 5 - 8 floors (74,170 sq ft) of 8 Finsbury Circus, EC2 by Rathbones. The investment management company took the space on a lease until 2033, at an above ground average rent of circa £74.30/sq ft, with a reported 27 months rent free.
■ Another notable deal was the acquisition of Part 7th and Part 8th floors (35,451 sq ft) of The Shard, SE1 by MatchesFashion. The retailer took the space on confidential terms and are relocating from Clapham.
■ Total City supply stood at 5.8m sq ft, equating to a vacancy rate of 4.7%, down on this point last year by 0.8%.
■ Of the current availability 56% of it is situated in the City Core, with EC2 accounting for the greatest amount at 27% of total supply.
■ Furthermore, we are currently aware of 677 units available for let in the City, with the <5,000 sq ft bracket accounting for the majority at 280 units. Whereas, the 10–15,000 sq ft bracket and the 15–25,000 sq ft both account for 25% of the total sq ft available in the City (Graph 1).
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GRAPH 1City supply by floorplate size
Source: Savills Research
■ There is currently 1.5m sq ft of space under-offer in the City, which is 14% up on the long-term average. Of this, 488,111 sq ft went under-offer in January alone.
g The top rent achieved in January was £75.00/sq ft when Assured Guaranty took the 11th floor of 6 Bevis Marks, EC3 equating to 7,083 sq ft.
■ The average Grade A rent for January was £60.57/sq ft. This is only the second time ever the monthly City average Grade A rent figure has exceeded £60, the first being in August 2015 (see Graph 2 below).
■ We are currently tracking 16.3m sq ft of refurbishments and developments due to arrive to the market between now and the end of 2019, of which 27% is already pre-let.
■ We are forecasting average annual rental growth of 2.3% for both average prime and average Grade A over the next five years (2016 - 2020).
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GRAPH 2City monthly avg grade A & vacancy
Source: Savills Research
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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 January transactions
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TABLE 9Significant supply
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MAP 1Savills City Office Market Area (updated at the end of each quarter)
Source: Savills Research