West End / West London

West End/West London take-up totalled 296,000 sq ft for Q3 2020 that was 52% below the 10-year quarterly average despite a strong end to the quarter.

During September alone, we saw 155,000 sq ft of office space transact in the market accounting for 53% of the quarterly total. Comparatively, take-up in July and August was subdued, reporting 69,000 sq ft and 72,000 sq ft respectively. The largest deal of the quarter was at the Copyright Office Building, 30 Berners Street, W1, where Netflix leased 87,000 sq ft of space in late September.

This deal helped contribute to TMT & Creative being the most active sector of the quarter, responsible for 51% of the overall activity, followed by Financial Services with 17%. Financial Services also accounted for the highest number of transactions by sector, with 6 of the 21 deals observed across the quarter, followed by Government and Public Services with 5 deals.

The Netflix deal meant that Fitzrovia saw the greatest volume of take-up between the submarkets. Mayfair saw 50,000 sq ft of leasing activity with the largest deal being G Network’s acquisition of 24,000 sq ft at 7 Swallow Place, W1.

Availability increased in the West End to 2.3 million sq ft, up 6.2% on the previous quarter. The vacancy rate increased for a second consecutive quarter to 2.8%, the highest observed since Q1 2019. In West London availability also increased, reaching 500,000 sq ft with a vacancy rate of 3.3%. Although the submarket’s vacancy is up on the previous quarter, it remains considerably below the 10-year average of 6.5%.

The long-term limitations to supply and the prestige of the area may provide some resilience against a weight of tenant offered space coming onto the market, with occupiers keen to hold on to their space where they can.

The supply of new space in the submarket continues to be constrained with the total under construction declining to 2.1 million sq ft. Only 17% of this is pre-let however, leaving 1.7 million sq ft available. The majority of this is due to complete in 2021, with 852,000 sq ft scheduled to come to market. 2022 currently has 765,000 sq ft due for completion, including Paddington Square, W2, which is expected to deliver 363,000 sq ft of office space – the largest development in the pipeline.

Prime rents and rent free periods remained stable in the West End/West London submarket for Q3 2020. The prime West End rent is currently £115.00 per sq ft on 24 months’ rent free. The MSCI West End and Midtown rental growth index fell 0.9% in the three months to September 2020.


KEY DEALS

TOP TENANT SECTORS

TMT & Creative

51%

Financial Services

17%

KEY STATS THIS QUARTER

TAKE-UP FOR Q3

296,000 sq ft

52% down on the 10-year quarterly average

Vacancy rate

2.83%

Under construction

2.1 million sq ft

Prelet

17%

Prime rent

£115.00

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