August is traditionally a quiet month for leasing activity. However, according to data from BNP Paribas, take-up in the City of London office market was surprisingly high, totalling an impressive 660,000 sq ft across 37 deals. This brings the total take-up for the year to date to 4.25 million sq ft.
The largest transaction of the month was Ashurst’s pre-let the London Fruit & Wool Exchange. The 275,000 sq ft deal is also the 13th largest pre-let recorded in the City in 2015. Pre-letting is expected to continue at the same pace for the remainder of the year as the vacancy rate continues its slight decline.
In August, the vacancy rate was 5.09 per cent, a drop from 5.21 per cent in July, and its lowest level since September 2000. Vacancy rates are expected to rise next month as about 450,000 sq ft of development space becomes available including 160,000 sq ft at 8 Finsbury Circus.
Investment during the month totaled £471 million, taking the figure for the first eight months of the year to £5.32 billion, a full 36 per cent higher than the same period one year ago.
With approximately £2 billion in high profile sales reportedly being made ready for market, the indicators point to another year of above-average investment activity.
In the West End office take-up reached 220,034 sq ft during August taking the total for the year to date to1.80 million sq ft.
Social media giant Facebook is under offer on 200,000 sq ft at Great Portland Estates, 1 Rathbone Square. The company also intends to create a “campus” in Fitzrovia.
The Media Tech sector, along with the Banking and Finance sectors are continuing to drive demand in the West End. All told, they account for one-quarter of take-up in the year to the end of August.
Under offers currently stand at 836,000 sq ft, a full 67 per cent ahead of average levels. In addition to the Facebook deal, WeWork is under offer on 100,000 sq ft at 2 Eastbourne Terrace and Pret a Manger is under offer on 60,000 sq ft at Verde, SW1. The vacancy rate dropped slightly from 3.60 to 3.58 per cent in July.
August investment volumes were £344 million in five deals. The value of annual transactions in the year to date is now £3.37 billion. Brockton Capital’s £137 million acquisition of 33 Horseferry Road was the largest transaction of the month.
