Q1 2019 sees uptick in amount of London office space under offer

• Availability for Q1 2019 at a 10-quarter low
• Secondhand office space dominating supply across Central London
• Largest Q1 deal saw Sony Music pre-let 124,600 sq ft in King’s Cross
• Prime rents increased in the City and in the West End

London, 23 April 2019 – The amount of London office space under offer in the first quarter of 2019 increased by 9% to stand at 3.7m sq ft representing a year-on-year increase of 20%, according to global real estate advisor CBRE.

Under offers remained above the 10-year average of 3m sq ft, with the largest unit under offer at the end of Q1 totalling 419,500 sq ft at 5 Bank Street in Canary Wharf. Under offers were above their respective 10-year averages in the City, West End and Docklands.

Prime rents increased in the City by £1.50psf to £71.00psf and in the West End by £2.50psf to £107.50psf.

After two quarters of increases, availability fell by 4% in Q1 2019 to 13.6m sq ft, the lowest level since Q3 2016. The primary cause of the decline was a 5% fall in the availability of secondhand space to 9.3m sq ft. The availability of early marketed space (space which is under construction and will be ready to occupy within 12 months) also fell by 5% to 2.7m sq ft, whilst the availability of new completed space increased by 5% to 1.5m sq ft.

Despite the fall in secondhand availability, secondhand space is dominating supply, accounting for 69% of all availability across Central London, unchanged from the previous quarter.

Take-up in Central London fell by 34% from the heightened levels seen in Q4 2018 down to 2.7m sq ft in the first quarter of 2019. Take-up for the quarter was led by eight deals over 50,000 sq ft, the largest of which saw Sony Music pre-let 124,600 sq ft at Building S1, Handyside Street in King’s Cross.

The Sony Music deal was one of 12 pre-lets in Q1 totalling 510,700 sq ft. Over the last 12 months, pre-lets have accounted for 26% of all take-up, significantly in excess of the 10-year average of 19%. The business services sector accounted for 31% of take-up in Q1, more than half of which was take-up by flexible office operators. A total of 19 deals by flexible office operators (386,900 sq ft) transacted over the course of the quarter, the largest of which saw Spaces pre-let 71,400 sq ft at The Cabot, 25 Cabot Square, in Canary Wharf.

The creative industries (20%) and the banking and finance sector (19%) also accounted for notable proportions of take-up in Q1.