Savills Belgium | West End Office Market Watch

Pre-lets continue to boost take-up in the West End

Supply and demand snapshot

■ February witnessed 298,106 sq ft of take-up, 77% of which was of a Grade A standard. This is a decrease of 14% on the 346,912 sq ft of take-up recorded in February 2015 (Graph 1).

■ This brought total annual take-up to 587,739 sq ft, 17% below the 705,030 sq ft of take-up recorded at this point in 2015 but 3% above the long-term average.

TABLE 1Key February stats

^{Source: Savills Research}

■ The largest transaction of the month was Capita’s acquisition of 87,150 sq ft at The Copyright Building, 25-29 Berners Street, W1. Scheduled for completion in Q3 2017, Capita have pre-let the entire building on a 20-year lease at a rent of £86.00 per sq ft.

■ Another notable pre-let to complete in February saw Oaktree Capital acquire 38,380 sq ft at Verde, SW1. The investment management firm have agreed to take the space on a 15-year lease at an average rent of £83.68 per sq ft.

■ In total 144,452 sq ft (50%) of February's take-up was made of pre-lets.

GRAPH 1February take-up

^{Source: Savills Research}

■ Elsewhere, Sateria Investments let four floors totalling 28,155 sq ft at Norfolk House on short-term leases. Amazon were one of the four tenants to acquire space.

■ Business & Consumer Services were the most active business sector in February, accounting for 33% of total take-up. Tech & Media firms were a close second accounting for 32% of total take-up, with Insurance & Financial Services accounting for 19%.

■ The average Grade A rent for February was £80.13 per sq ft.

■ The highest rent recorded in February was £110 per sq ft, the transaction saw Centrebridge Partners acquire 4,732 sq ft at 61-63 Brook Street, W1 on a 10-year lease.

■ Supply at the end of February stood at 3.64m sq ft, equating to a vacancy rate of 3%, with 75% of a Grade A standard. This represents a decrease of 2% on the 3.73m sq ft available at the end of January and 14% below the 4.22m sq ft available at the end of February 2015 (Graph 2).

■ The lack of availability in the West End looks set to only be heightened in the coming months. 607,244 sq ft of supply is currently under-offer, which is 1% above the long-term average.

■ We estimate that 9.45m sq ft of developments and extensive refurbishments will be delivered to the market between now and 2019, of which 16% has already been pre-let.