Take-up continues to exceed the long-term average

Supply and demand snapshot

■ August saw 363,124 sq ft of take-up across 33 transactions, with an average transactions size of 11,004 sq ft.

■ This brought 2016's year to date take-up to 2.53m sq ft, which is 8% below this point in 2015 but 8% above the long-term average.

■ Similarly, the 12-month rolling take-up in the West End is 4.14m sq ft, 19% above the long-term average (Graph 1).

TABLE 1Key August stats

^{Source: Savills Research}

GRAPH 112-month rolling take-up

^{Source: Savills Research}

■ However, the amount of supply under-offer has fallen to 382,781 sq ft, 36% below the long-term average, with just 89,102 sq ft having gone under-offer in August.

■ Smaller transactions continue to dominate in the West End, with 72% of all transactions that have completed so far in 2016 being below 10,000 sq ft (Graph 2).

GRAPH 2Number of transactions by size band

^{Source: Savills Research}

■ The largest transaction to complete in August saw Westminster City Council acquire 61,800 sq ft at 5 Strand, while the council also acquired 46,042 sq ft at Portland House, both on short-term leases. The council will use both sites to house its staff while Westminster City Hall is refurbished, with the works scheduled to complete towards the end of 2018.

■ Another notable transaction was Citrix's acquisition of the top two floors (15th and 16th) at Land Securities' 20 Eastbourne terrace totalling 11,967 sq ft on a 10 year lease. The software giant have agreed to a rent of £77.50 per sq ft, the highest rent ever achieved in Paddington.

■ Tech & Media firms continue to be the most active in the West End accounting for 23% of year to date take-up. However, this is below Tech & Media's 5 year average market share of 35%. The next most active business sectors in 2016 have been Retail & Leisure and Insurance & Financial services, with both sectors accounting for 15% of take-up.

■ Supply at the end of August stood at 3.88m sq ft, equating to a vacancy rate of 3.2%. This represents a 2% decrease on the 3.97m sq ft available at the end of July but is 16% above the 3.33m sq ft of supply available at the end of August 2015.

■ There is only 132,000 sq ft of speculative development due to complete in Q1 2017, which will be added the supply pipeline at the end of the month.

■ We have continued to see strong rental levels in the West End with the average Grade A rent at the end of August standing at £77.19 per sq ft, 6% above 2015's average Grade A rent of £73.07 per sq ft. There has been even greater growth in Grade B rents, with the average Grade B rent at the end of August standing at £66.56 per sq ft, 19% above 2015's average Grade B rent of £58.87 per sq ft.

■ There was only one recorded rent of £100.00 per sq ft or greater in the West End in August. The transaction saw VIY Management sublease 2,000 sq ft from Habrok Capital Management at 103 Mount Street at a rent of £100.00 per sq ft.