Central London space under offer at highest level since November 2000
Under offers now 65% above the long-term average
The volume of space under offer in the Central London office market is at its highest level since November 2000, according to new research from CBRE.
At the end of May 2015, a total of 4.5 million sq ft was under offer in Central London, an increase of 25% from April, driving under offers to 65% above the long-term average of 2.7 million sq ft. The positive trend was seen across Central London submarkets which all recorded monthly increases to above-trend levels.
At the end of May a total of eleven units over 50,000 sq ft were under offer in Central London, the largest of which was 374,000 sq ft to a banking and finance occupier at 10 Upper Bank Street, E14.
The legal services sector accounts for three of the ten largest under offers in Central London totalling 485,000 sq ft, including 275,500 sq ft to Ashurst at The London Fruit & Wool Exchange, E1, the largest under offer in the City. Facebook is the only creative occupier under offer on space over 50,000 sq ft, at 338 Euston Road, NW1. This is the largest under offer in the West End totalling 65,900 sq ft.
Take-up in Central London in May 2015 was 831,600 sq ft, representing a monthly fall of 15%. This took the 2015 year-to-date figure to 4.9m sq ft, ahead of trend. Take-up in May 2015 was notable for having all three of the largest deals of the month coming from the insurance sector, led by a 53,300 sq ft letting to Arthur J Gallagher at 67 Lombard Street, EC3.
Central London availability continued to fall, with availability at the end of May dropping to 10.2 million sq ft, 33% below the 10-year average. The fall in availability caused the Central London vacancy rate to fall by 40bps to 2.8%.
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.