According to the latest research by commercial property services firm CBRE, the amount of space under offer in the Central London office market is at its highest level since November 2000.
At the end of May a total of 4.5 million sq ft of office space was under offer in Central London, marking a 25 per cent increase since the end of April. To put this into perspective, the long term average for the area totals 2.7 million sq ft, meaning May’s result is a staggering 65 per cent higher than would generally be expected.
Furthermore, the trend was spread throughout all Central London submarkets, all of which noted monthly increases to above trend levels.
A total of eleven units over 50,000 sq ft were under offer in Central London at the end of last month, the largest of which was the 374,000 sq ft at 10 Upper Bank Street which is under offer to a banking and finance occupier.
The legal services sector accounts for three of the top ten under offers, totalling 485,000 sq ft. This includes 275,000 sq ft currently under offer to Ashurst at the London Fruit & Wool Exchange – the largest under offer in the City.
Facebook is the only occupier from the creative sector with anything above 50,000 sq ft under offer, with its 65,900 sq ft at 338 Euston Road being the largest under offer in the West End.
Yet while the under offer category is performing admirably, CBRE also discovered that take-up during the month fell by 15 per cent to 831,600 sq ft. This is still an extremely impressive result, taking the 2015 year to date take-up figure to 4.9 million sq ft, well ahead of the average trend.
Take up for May was largely led by the insurance sector, firms from which sealed the three largest deals in Central London during the month. The largest was the take-up of 53,300 sq ft at 67 Lombard Street by Arthur J Gallagher.
The number of deals secured during the month led to a further fall in availability, with only 10.2 million sq ft left vacant by the end of the month. This is 33 per cent lower than the 10 year average and brought the Central London vacancy rate to 2.8 per cent, indicating that the battle for space will further intensify as the summer progresses.
Executive director of the City Agency at CBRE, Chris Vydra, points out that the shortage of space will almost certainly lead to further increases in rents over the coming months.
He says; “The high level of under offers in the market indicate that momentum is building. Take up was extremely strong in 2014 and it is clear that this is being replicated in 2015.
“With availability at a cyclical low point, it is likely that rents will continue to increase throughout Central London.”
