Savills Belgium | West End Office Market Watch

The vacancy rate has risen above 3% for the first time since November 2015

Supply and demand snapshot

■ April saw take-up of 235,949 sq ft across 36 transactions, with an average transaction size of 6,554 sq ft.

■ This brought the year-to-date take-up total to 1.28m sq ft, which is 3% above this point in 2015 and 10% above the long-term average.

■ The 12 month rolling take-up in the West End is 4.39m sq ft, 21% above the long-term average (Graph 1).

TABLE 1Key April stats

^{Source: Savills Research}

■ 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

GRAPH 112-month rolling take-up

^{Source: Savills Research}

■ 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.

■ 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.

GRAPH 2Number of transactions by size band

^{Source: Savills Research}

■ 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%).

■ 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.

■ This has resulted in the vacancy rate rising to 3.1%, the first time it has exceeded 3% since November 2015.

■ 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.

■ 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.

■ 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.