Under offers at highest level since 2015
Take-up of Central London office space increased by 74% in May 2018 to 1.3m sq ft, above the 10-year average of 1m sq ft. This takes the year-to-date total to 4.9m sq ft, 15% higher than at the same point last year, according to CBRE, the world’s leading real estate advisor.
Take-up was spearheaded by an owner-occupier transaction for the Chinese Embassy at Royal Mint Court, EC3, comprising 520,000 sq ft of office space. Availability remained at 14.4m sq ft in May, below the 10-year average of 14.9m sq ft.
Under offers in Central London increased by 9% over the course of the month to stand at 4.2m sq ft, a 33-month high. At the end of May 2018, under offers were 46% above the 10-year average. The largest office unit under offer at the end of May was at 11/21 Canal Reach in King’s Cross, where an un-named US tech company is in talks to pre-let the entirety of the 404,600 sq ft scheme. There were 47 units across Central London with more than 20,000 sq ft under offer at the end of May (of which 17 were over 50,000 sq ft).
A total of 1.9m sq ft of development and refurbishment space has completed so far in 2018, 88% of which has already been let or is under offer. At the end of May, there was 14.6m sq ft under construction, 49% of which has already been let or is under offer. Central London active demand stood at 9.1m sq ft, up on the previous month (8.8m sq ft).
Driven by the Chinese Embassy deal, the public sector represented the highest proportion of take-up at 45%. The business services sector accounted for 35% of take-up in May, driven by six deals to flexible office providers acquiring 374,000 sq ft. Over the last 12-months, the business services sector has led the market with 32% of take-up, followed by the creative industries sector (20%) and the banking and finance sector (19%).
Chris Vydra, Head of City Leasing at CBRE commented: “May has been an active month for office take-up, driven by the Chinese Embassy transaction. With under offers being at a three year high, the prospects for the second half of this year are encouraging as occupiers from across a wide range of sectors continue to commit to London.”