Significantly high level of space under offer despite slow start to 2018

Supply and demand snapshot

■ January take-up reached 243,902 sq ft across 32 transactions with an average transaction size of 7,622 sq ft.

■ Take-up was down on this point last year by 6% and also down 26% on the long-term average for January of 327,499 sq ft.

TABLE 1Key January stats

^{Source: Savills Research}

■ A notable transaction to complete in the West End in January was at One Embassy Gardens, SW8, with Penguin Random House pre-letting 83,399 sq ft on a 15-year lease at £55.00 per sq ft.

■ Elsewhere, Serviced office provider, i2 Offices acquired the 9th and 10th floors at 33 Cavendish Square, totalling 20,989 sq ft collectively, at £72.50 per sq ft on a 15-year lease.

■ The Tech & Media sector continued to lead take-up, accounting for 56% of take-up at the end of January, followed by the Serviced Office sector at 18%, and the Insurance & Financial Services sector at 10%.

■ Whilst take-up at the end of January was relatively low, a further 189,917 sq ft went under offer. This brought the total amount of space under offer in the West End to 980,976 sq ft, up 63% on the long-term average. Notable spaces currently under offer include 75,900 sq ft (3rd-5th, part 8th floors) at Nova North, SW1, 29,794 sq ft (3rd floor) at Nova South, SW1, and 28,702 sq ft (4th floor) at 1 Curzon Street.

GRAPH 1West End 12 month rolling take-up

^{Source: Savills Research}

■ Supply rose 4.5% from 4.42m sq ft at the end of December to 4.63m sq ft at the end of January, equating to a vacancy rate of 4% . This is also up 20 bps on the start of the previous year where at the same point the vacancy rate was at 3.8% . The vacancy rate still remains below the long term average of 4.5%.

■ 66% of current supply is of Grade A standard, while tenant controlled space is at 28%, up from 18% in January 2017.

■ There is 1,436,617 sq ft of development and extensive refurbishment completions scheduled for the second half of 2018, of which 964,617 sq ft, (67%) has already been pre-let. The 472,000 sq ft of speculative completions will add further to supply over the coming months.