West End Leasing Market
Overview
Take up of West End offices in the first half of 2024 has remained subdued. Whilst lettings in Q2 reached 0.66M sq ft showing a marginal increase (3%) on Q1, this still sits 35% below the long-term average for the quarter. There has been a distinct absence of large deals (20,000 sq ft plus) in Q2 which has contributed to these disappointing figures. That said there are several larger deals currently under offer which should readdress this dearth of bigger transactions by the end of the year.
West End vacancy rates have increased to 7.9%, which is now at its highest level since 2010. This still sits someway below the overall vacancy across Central London, which is at 10.5%.
Grade A availability remains limited, particularly in the submarkets of Mayfair, St. James’s, Marylebone, Soho and Fitzrovia, with only 200,000 sq ft of newly developed space available to occupy now. However, at the other end of the spectrum second hand availability stands at an all time high of over 5M sq ft – further emphasising the two-tier nature of the market.
Headline Allsop Deals
In Q2 Allsop were delighted to complete the disposal of three outstanding fully fitted floors in Midtown. At 262 High Holborn, WC1 the First and Second floors comprising 9,200 sq ft were let to Confluent Europe and Public Digital on behalf of Lazari Investments. In addition, at York House, 23 Kingsway, WC2 we completed a deal comprising 6,100 sq ft to the World Nuclear Association on behalf of CBRE Investors.
We also completed 2 occupational advisory mandates – acquiring 2,500 sq ft on behalf of a Property Company client at The Hide, 3 Kingly Court, W1 and acquiring 1,500 sq ft on behalf of Equita Ltd at 31 Dover Street, W1.
262 High Holborn, WC1
York House, 23 Kingsway, WC2
The Hide, 3 Kingly Court, W1
31 Dover Street, W1
Headline Market Deals
As mentioned, the West End has seen a limited number of large transactions in H1 2024. The largest transaction of Q2 was Liberty Group taking 37,600 sq ft at Cadogan Estates’ 120 Kings Road, SW3. Following that a further prominent deal with an SW postcode was retailer Mountain Warehouse securing 31,455 sq ft in Victoria at 7 Howick Place, SW1.
120 Kings Road, SW3
7 Howick Place, SW1
What is the Direction of Travel?
The overall statistics for Q2 in the West End illustrate a market that is struggling to get into gear in 2024 thus far. However, whilst overall leasing volumes remain underwhelming and availability of second hand space continues to increase, we are still seeing continued rental growth for the best space, with premium floors benefitting from private roof terraces still regularly commanding more than £200 per sq ft. Rental growth in core markets is approaching 11% year on year and there have been 46 lettings in excess of £100 per sq ft completed in H1 2024.
The gap between the best and the rest continues to widen.