Encouraging post-Brexit leasing activity with record July take-up

Supply and demand snapshot

■ In the first full month of leasing activty since the British public voted to leave the European Union, take-up for July totalled 320,759 sq ft, the highest July total on record and 50% above July's long-term average take-up level (see Graph 1).

■ July's leasing activity brought year to date take-up to 2.17m sq ft, which is 9% below this point in 2015 but 4% above the long-term average (see Graph 2).

■ Similarly, the 12-month rolling take-up in the West End is 4.13m sq ft, 19% above the long-term average.

TABLE 1Key July stats

^{Source: Savills Research}

GRAPH 1July take-up

^{Source: Savills Research}

■ Encouragingly, despite the current back drop of uncertainty July saw large occupiers continue to commit to space In the West End, with five transactions exceeding 25,000 sq ft. Furthermore, four of these tenants also committed to long-term leases, of the transactions, three were 15-year leases, one a 10-year lease and the other undisclosed.

■ The largest of these transactions saw PA Consulting acquire the part 6th and 7th floors at Tishman Speyer's Verde, totalling 58,620 sq ft on a 15-year lease at a rent of £80.00 per sq ft. Following the transaction, the 286,000 sq ft office development due to complete at the end of August is now 48% let.

■ Elsewhere, Moneysupermarket agreed to acquire floors 3–5 at 1 Dean Street totalling 34,494 sq ft. The online comparison site have signed a 15-year lease at a rent of £82.50 and as part of the transaction also have an option to take the final 6th floor. The Great Portland Estates development is due for completion in Q4 2017.

■ However, despite July's high level of take-up, there were only 25 recorded transactions, the lowest monthly total of the year.

■ In total, 479,851 sq ft (22%) of 2016's take-up to date relates to space that has been pre-let.

■ Supply at the end of July stood at 3.97m sq ft, a 1% increase on the 3.93m sq ft of supply available at the end of June 2016 and 29% above the 3.07m sq ft of supply available at the end of July 2015. Notable supply to be added to the pipeline in July includes 52,403 sq ft at 21 Dartmouth Street and an additional 45,027 sq ft at 80 Victoria Street.

GRAPH 2Take-up to end of July

^{Source: Savills Research}

■ The increase in supply has resulted in the vacancy rate rising to 3.3%, its highest level since March 2015.

■ 504,307 sq ft of supply is currently under offer, 16% below the long-term average. 166,507 sq ft of this went under offer in July.

■ We are currently tracking 5.85m sq ft of developments and extensive refurbishments that are due for completion between 2017 and 2019, of which 20% has already been pre-let.