London Floor Review Q1 2017

A floor-by-floor analysis of the London office market Q1 2017

Pre-letting activity creates a strong start to 2017

A surge of pre-letting activity in the capital boosted take-up volumes to reach 2.7 million sq ft in Q1, its highest level in 12 months and 3% above the five year average. With a number of large buildings currently under construction, occupier’s desire for new space will act as a confidence boost to developers.

Magic Circle firm Freshfields Bruckhaus Deringer signed the largest deal of the quarter, a 250,000 sq ft pre-let to occupy floors 20-32 at Brookfield Property Partners’ 100 Bishopsgate, which is due to complete next year.

Other pre-lets include management consultants, McKinsey, which pre-let 97,000 sq ft at 21-31 New Oxford Street; retailer COS, H&M’s luxury brand, which pre-let 61,000 sq ft at 1-19 New Oxford Street, and Arup Group, which signed a 134,000 sq ft pre-let on the first to third floors as well as part of the ground and lower ground floor at Derwent London’s 80 Charlotte Street.

Availability begins to fall

Occupiers are struggling to find the right space to suit their needs prompting many to turn to upcoming developments to solve their real estate requirements. Despite a number of development completions, strong letting activity has led to a decline in the availability rate to 5.1%.

In the West, availability remains particularly low around King’s Cross and Marylebone with availability rates at 2.2% and 2.3% respectively. Much of the remaining stock in these markets suffers from a lack of quality, with only an average of 28% either new or recently refurbished.

In the East, availability is at its most restricted in EC1, with availability rates falling from 5.3% to 4.3% in Q1. However, the majority of available stock is of good quality with only 25% currently unrefurbished.

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