Abstract

Take-up remains above the long-term average, whilst space under offer increases

Supply and demand snapshot

■ Take-up in April reached 275,473 sq ft across 24 transactions, bringing take-up for the first four months of the year to 1.3m sq ft. The volume of transactions to complete over the month was the lowest for April in five years but overall year-to-date take-up still remained up on the long-term average for this period by 13%.

TABLE 1 | Key April stats
_{Source: Savills Research}

■ The largest transaction to complete was at 18-19 Hanover Square, W1, with KKR taking a pre-let of the 5th to 8th floors (57,200 sq ft), on a 15-year lease. April also saw LEK Consulting take the 3rd floor (39,794 sq ft) at Nova South, SW1 on confidential terms.

■ An additional 190,800 sq ft of current supply went under offer, bringing the total amount under offer to 965,594 sq ft, 61% up on the long-term average. Over a quarter of space under offer is to Serviced Office Providers.

■ We also saw space under offer in the development pipeline increasing to 729,700 sq ft at the end of April. This brought the total amount of space under offer to 1.6m sq ft. The majority of space under offer, around 40% of this total, is in the King's Cross sub-market.

■ The Insurance and Financial sector accounted for a 58% share of take-up, off the back of five transactions. Another notable transaction to an Insurance & Financial sector occupier was at 2 St James's Market, with Varde Partners completing on the 2nd and 3rd floors on confidential terms. The Extraction & Utilities sector followed behind with 21%, while the Tech & Media sector slipped back into third place with a 16% market share.

■ The Tech & Media sector still remains top of sector take-up for the year so far, accounting for 36% of year-to-date take-up.

GRAPH 1 | West End take-up by sector YTD
_{Source: Savills Research}

■ Supply continued to decline and at the end of April stood at 4.58m sq ft, down from 4.67m sq ft at the end of March, equating to a vacancy rate of 3.8%. With the vacancy rate once again down 10 bps on the previous month, supply continues to slowly drift further away from the long-term average of 4.5%.

■ 6.5m sq ft of new and extensively refurbished space is scheduled for delivery between 2019 and the end of 2021. Almost a quarter (24%) of this has already been pre-let and we anticipate further pre-letting activity this year.

■ We are currently tracking 4.5m sq ft of West End & central London requirements, down 22% on the 12-month average.