West End Letting Market

2019 saw 4M sq ft of lettings completed across the West End, slightly above the 10 year long term average

In a year dominated by wider political uncertainty, the West End office leasing market has surpassed the expectations of many, with robust demand resulting in strong take up levels across all submarkets. 2019 saw 4M sq ft of lettings completed across the West End, slightly above the 10 year long term average of 3.5M sq ft. The Tech & Media sector continues to be the key driver of demand across the marketplace and has been responsible for over 25% of space let in 2019, closely followed by companies in the Finance sector, which secured 21%. The serviced office sector, despite a slowdown in take up of new space over the last quarter, was still responsible for 19% of lettings. Notable lettings in the last quarter of the year have included Take-Two Interactive Software securing 40,000 sq ft at 30 Cleveland Street, W1 and the London Transport Museum acquiring TfL’s existing lease for 60,500 sq ft at Albany House, 84 Petty France, SW1.

In terms of supply we have seen 2.3M sq ft of new and comprehensively refurbished accommodation come onto the market in 2019 and notably 80% of this space has been let prior to completion. The vacancy rate in the West End remains at c.4% of total stock and with an exceptionally limited supply pipeline moving into 2020, there seems little possibility of this increasing notably in the short term. Looking further ahead, 28% of the development pipeline for the next 4 years of c. 10M sq ft has already been pre-committed, which will only serve to increase the urgency for larger occupiers seeking new space in the West End to commence their searches earlier than ever before.

Average Prime Rents in the West End continue to sit at £120.00 per sq ft, although given the dwindling availability of good quality floorplates, particularly in the Mayfair submarket, there is the potential for further rental growth in some undersupplied submarkets moving through 2020.

At the smaller end of the market, pro-active Landlords are continuing to respond to the serviced office sector offer by investing further to provide “furnished and work ready” office spaces. Smaller occupiers’ expectations as to what their office should provide for them from day one has significantly changed in recent times and it is important the market continues to adapt to this in order to ensure the continued success of conventionally leased offices.

Richard Townsend

DL +44 (0)20 7543 6718