68% of all office developments and extensive refurbishments set to in London’s West End in 2019 have already pre-let, reports Savills in the latest research.
Only three schemes have enough speculative space to accommodate a over 100,000 sq ft.
The key transactions in 2018 were Facebook’s pre-letting of 615,000 sq ft at 21 Canal Walk in Kings Cross, WeWork’s pre-let of Aviation House 131,818 sq ft and Sony Pictures at the Brunel Building 77,200 sq ft.
Hunter Booth, co-head of the West End office agency team at Savills, commented: “In a market increasingly reliant on pre-lets to satisfy demand, the West End continues to prevail despite the background political headwinds and uncertainty. The occupiers operating in our market are making office commitments based on corporate decisions and a supply/ demand imbalance that appears to override any wider uncertainty on Britain’s decision to leave the EU. In many it remains business as usual and this sentiment is already apparent in the first month of 2019, with a good level of requirements and deals continuing to happen. While we are not seeing much rental growth in the West End, which could appear counter-intuitive to market fundamentals, this can partially be explained by the now-expected footloose nature of tenants across Central London meaning landlords are competing with a wider range of competing buildings than ever before.
“As the year plays out we will be monitoring the level of tenant controlled space that is returned to the market and what effect this has. However, with supply levels low it is likely that any ‘grey space’ will be absorbed and the West End would welcome more announcements to commit from the developers we know to be looking for opportunities. Any new space in the pipeline is good news and developments that offer occupiers a point of difference through considered design will do well.”
See also: List London office developments completing in 2019.