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West End Office Market Watch

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Contacts & Related Research

Take-up in the West End office market remains well above the long term-average

Market comment and notable deals

  • Take-up for August reached 259,374 sq ft, across 28 transactions, bringing year-to-date take-up to 3.5m sq ft, following strong demand in July.
  • Year-to-date take-up is up 14% on the previous year and 48% on the long-term average. Even if Facebook's pre-let of 600,000 sq ft at King's Cross is excluded, year-to-date take-up is still up on the long-term average by 23%.
Table 1

TABLE 1 | Key August stats
Source: Savills Research

  • Transaction volumes at 300 completions are also up on the long-term average number of transactions by 23%.
  • The largest transaction to complete over the month was at 123 Buckingham Palace Road, SW1 with WeWork taking 40,987 sq ft on the 2nd floor, on terms which remain confidential at present. The next largest transaction was also to a Serviced Office Provider with the IWG Group taking the remaining office space (39,578 sq ft) at Battersea Power Station, also on confidential terms.
Graph 1

GRAPH 1 | Year-to-date take-up
Source: Savills Research – August 2018

  • The Serviced Office Provider sector dominated take-up off the back of three transactions over the month, giving it a 44% market share. This sector has accounted 515,572 sq ft of take-up so far, down 12% on the amount of space taken on the same period in 2017. A further 150,000 sq ft is currently known to be under offer to this sector.
  • The Insurance & Financial sector followed with a 31% share of monthly take-up and then Tech & Media sector with 13%.
  • Nonetheless, the Tech & Media sector continues to be the main driver of demand in the West End. Just shy of a third (31%) of take-up this year has been to Tech & Media sector occupiers. Similarly, West End and Central London requirements almost mirror demand from this sector, with the Tech & Media sector accounting for 35% of the 4.3m sq ft of active requirements we are currently tracking.
Graph 2

GRAPH 2 | WE & Central London requirements
Source: Savills Research – August 2018 – (excluding serviced office providers)

  • Supply remained virtually at the same level at 4.76m sq ft, equating to a vacancy rate of 3.9%. Though supply is set to rise over the next few months with 700,000 sq ft of space coming to the market over Q1 2019.
  • Total space under offer has remained well above the long-term average and was unchanged from the previous month at 1.7m sq ft.

Analysis close up

Table 2

TABLE 2 | Take-up
Source: Savills Research

Table 3

TABLE 3 | Supply 
Source: Savills Research

Table 4

TABLE 4 | Rents 
Source: Savills Research

Table 5

TABLE 5 | Demand & Under Offers
Source: Savills Research
Demand figures include central London requirements

Table 6

TABLE 6 | Development pipeline
Source: Savills Research
Completions due in the next six months are included in the supply figures
*Average prime rents for preceding three months
** Average rent free on leases of 10 years for preceding three months

Table 7

TABLE 7 | Significant August transactions
Source: Savills Research

Table 8

TABLE 8 | Significant supply
Source: Savills Research