29 January 2019 | Herpreet Kaur Grewal
Last year ended with 3.3 million square feet of central London office space under offer, the highest year-end total in nearly two decades (since 1999), according to global real estate adviser CBRE.
The largest unit under offer at the end of Q4 was at 5 Bank Street in Canary Wharf, where 419,500 sq ft was under offer.
At the end of Q4, under offers were above trend in Midtown and Docklands. There were 37 units with over 20,000 sq ft under offer across central London at the end of Q4, six of which were for 100,000 sq ft or larger.
Take-up in central London for Q4 2018 was 3.9 million sq ft, a quarterly increase of 13 per cent above the 10-year quarterly average of 3.2 million sq ft. This took the full-year total to 13.7 million sq ft, exceeding the levels seen in both 2016 (12.3 million sq ft) and 2017 (13.4 million sq ft).
Take-up for 2018 was also comfortably above the 10-year annual average of 12.8 million sq ft.
Three deals of over 100,000 sq ft were transacted over the course of the quarter, the largest of which saw WeWork sublease 159,200 sq ft from Marks & Spencer at 5 Merchant Square in Paddington. This will become WeWork's third-largest centre in London after Southbank Place and Moor Place.
A total of 26 deals to flexible office operators totalling 755,900 sq ft helped to boost business services take-up to 31 per cent of the central London total. The creative industries sector also represented a notable proportion of take-up at 15 per cent.
A total of 4.7 million sq ft of development and refurbishment space was completed in 2018. At the end of 2018, there was 13.7 million sq ft under construction - 48 per cent of which was available.
Prime rents increased in the City of London by £1.00 per square foot (psf) to £69.50 psf and in the Docklands by £0.50 psf to £48.50 psf. Prime rents remained unchanged in all other central London markets.
Richard Smart, executive director of London leasing, said: "2018 ended with a bang, as centrally located London office space continued to be snapped up by occupiers. In a continuing trend, flexible office operators acquired large units across London; this included several new entrants to the London market. The large amount of space under offer at the end of last year will mean that 2019 is set for a buoyant start."