Central London MarketBeat Quarterly Report

Hayley Armstrong • 05/02/2020

London Office Property Highlights:

  • 2019 take-up stood at 11.6 million sq ft - in line with the five-year annual average
  • 47 transactions signed over 50,000 sq ft in 2019 - 12 were in excess of 100,000 sq ft
  • 3.0 million sq ft under offer across London - 4% ahead of the five-year average
  • 7.6 million sq ft speculatively under construction - 54% of space is pre-let or under offer
  • 2019 investment volumes were £12.3 billion - 30% below five-year annual average
  • Prime yields across London: 4.00% City and 3.75% West End

Take-up in Q4 reached nearly 3.0 million sq ft, bringing the annual total to 11.6 million sq ft, which was 7% lower than 2018 volumes but in line with the five-year annual average.

The largest transaction in Q4 was The Office Group’s acquisition at Chancery House, WC2 (156,000 sq ft).

Other significant deals included Deloitte Digital’s acquisition of 142,000 sq ft at Athene Place, EC4, Monzo Bank’s pre-let of 122,000 sq ft at Broadwalk House, EC2 and L'Oréal taking 120,000 sq ft at Gateway Central, White City Place, which underlined the continued appetite for pre-let space.

Take-up was boosted by a greater number of large transactions, with 11 transactions in excess of 50,000 sq ft completing in Q4, bringing the total number of 50,000 sq ft plus deals in 2019 to 47, the highest proportion since 2014.

Despite the strong leasing activity, the volume of space under offer remained resilient, standing at 3.0 million sq ft at the end of December, 4% ahead of the five-year quarterly average.

Supply levels across Central London increased by 5% quarter on quarter to 13.6 million sq ft, as new developments entered supply figures; although this is not the case for every submarket.

Total supply at the end of 2019 was 11% ahead of the five-year average of 12.3 million sq ft, but remains in line with the ten-year quarterly average.

A total of £4.6 billion was invested in Central London in Q4, 82% above the £2.5 billion transacted during the previous quarter. This brought the annual 2019 total to £12.3 billion, 36% below the level recorded in 2018 (£19.1 billion) and 30% below the five-year annual average.

Demand for large lot sizes remained healthy in Q4 with 14 transactions in excess of £100 million completing, up from nine deals in the previous quarter.

As a result the average lot size increased to £88.7 million, compared to £58.9 million in Q3. UK investors were the dominant source of capital into Central London during 2019, accounting for 30% of all turnover, compared to 24% of the market in 2018.

This was followed by investors from North America who accounted for a further 27% of 2019 annual investment activity, equating to just over £3.2 billion.

Prime yields moved in to 4.00% in the City during Q4 and remained unchanged in the West End at 3.75%. 

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