Apple's 500,000 sq ft acquisition at Battersea has brought 2016 take-up in line with 2015

Supply and demand snapshot

■ 666,844 sq ft of take-up was recorded in September across 31 transactions, bringing take-up in the first full quarter since the EU Referendum to 1.35m sq ft.

■ The majority (75%) of September's take-up and much of Q3 2016's take-up (37%) relates to a single transaction, Apple's landmark acquisition of 500,000 sq ft at Battersea Powerstation, SW8. Apple will consolidate its current office locations and use the site as its UK headquarters, with the development due for completion in 2021.

TABLE 1Key September stats

^{Source: Savills Research}

GRAPH 1Take-up by size band

^{Source: Savills Research}

■ Another notable transaction to complete in September was EQT's acquisition of the third floor at GPE's 30 Broadwick Street totalling 14,639 sq ft. The Swedish private equity group have signed a 10-year lease at a rent of £89.50 per sq ft.

■ September's activity has brought the year-to-date take-up at the end of Q3 to 3.20m sq ft, in line with the same point in 2015 and 15% above the long-term average.

GRAPH 2Rents

^{Source: Savills Research}

■ However, following September's leasing activity the amount of supply under-offer has fallen to just 390,500 sq ft, 35% below the long-term average with just 92,500 sq ft having gone under-offer in September.

■ Predominantly due to the letting at Battersea, deals in the 100,000> size bracket have accounted for the most amount of take-up so far in 2016 (23%), followed by the 10–15k size bracket (18%), with the 25–50k and 5–10k size brackets then both accounting for 16% (Graph 1).

■ The highest rent recorded in September was £120.00 per sq ft. The transaction saw Engadine Investment Partners acquire the 4th floor at 3 St James's Square, SW1 totalling 2,220 sq ft on a 10-year lease. The level of rent free to support this rent is not known.

■ 2016's average Grade A rent at the end of Q3 stood at £77.13 per sq ft, 6% above 2015’s average Grade A rent of £73.07 per sq ft. The average Grade B rent has also increased, rising 7% from £53.64 per sq ft in 2015 to £57.26 per sq ft at the end of Q3 2016 (Graph 2).

■ While headline rents held strong in Q3 there was a slight increase in the level of incentives being offered to tenants, with the average amount of months given rent free on a 10-year lease rising from 14 months in Q2 to 16 months in Q3.

■ Supply at the end of September stood at 4.00m sq ft, equating to a vacancy rate of 3.3%. This is 3% above the 3.88m sq ft available at the end of August 2016 and 18% above the 3.29m sq ft available at the end of Q3 2015.

■ 44% of the 2.33m sq ft of developments and major refurbishments due for completion in 2017 have already been pre-let.