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A report from the commercial property firm Cushman & Wakefield states that over 11 million square feet of office space in the area will be leased in 2011-13, which will create a scarcity of space.
This will in turn produce upward pressure on rents and make pre-lets more commonplace the property firm stated.
Over the first quarter of this year, the total supply of office space in the West End dropped by more than ten per cent. The fact that there were no major development completions in the first quarter exacerbated this.
Currently, central London has a supply of 18.1 million square feet, a year-on-year drop of four per cent.
Guy Taylor, Head of West End Offices, Cushman & Wakefield, said, “This market in the West End is being driven by a lack of choice of good quality space due to the lack of development since the beginning of the recession.
“Take-up is being driven by lease events more than expansion and the TMT and financial sectors are pushing the market forward.”
Take up in the West End in the first quarter of 2011 was approximately 600,000 square feet, with TMT being the most active sector. This sector accounted for 45 per cent of take up. Statistically, the most active sub-market in the West End was Soho and Covent Garden.
The report also found that rents of approximately GBP 100 per square foot are fairly common in Mayfair and St James’s. And in the short term, there is no sign that rents will drop. Mayfair in particular is a favored location for niche financial players such as hedge funds.
Editor’s notes: In 2022, headline rents in the West End reached £130 per square foot per year for the best space.
Take-up through office space lettings totalled 4.1 million square feet – this was higher than the previous year and 11% higher than the 10-year annual average of 3.7 million square feet.
The Banking and Finance sector accounted for the highest proportion of activity in 2022 at 44.3% followed by the Manufacturing Sector at 15.6% and then the technology, media and telecoms (TMT) sector at 15.5%.
In Q1 2023, active demand stood at 3.1 million square feet, which represented a rise of 14% quarter-over-quarter.
Several new-build development schemes were underway and are due to complete in 2024 and 2025, and a total of 3.2 million square feet was due to complete in 2023.