Market snapshot

Office Market Pulse Central London Q1 2014

Central London offices remain at the forefront of the UK commercial property market in Q1 2014, with investment transaction volumes reaching £2.71bn. Despite this, there was a substantial decrease in quarterly investment, with a 65% drop compared to the £7.48bn transacted in Q4 2013. 

Prime Central London rents in Q1 2014 have risen across the majority of submarkets, when compared with the same period of 2013.

You can download a PDF version of this Central London office market pulse, or read and sign-up to receive Office Market Pulses from other UK centres.

For a full analysis of the performance of the office market in Central London and the rest of the UK in 2013, read our Office Market Review

In this issue:

Key transactions in Central London Q1 2014

Property 

Size (sq ft) 

Landlord(s)/ vendor

Tenant

Lease information (per sq ft)

1 London Wall Place, EC2 309,000 Brookfield and Oxford Properties Schroders plc Pre-let
25 Churchill Place, E14 205,000 Canary Wharf Group EY £48.50
6 Pancras Square, NW1 159,874 AXA Google £68.00
The Banking Hall, 8-10 Moorgate, EC2 133,900 Mitsui Fudosan ING Bank NV £57.50
5 Langham Place, W1 70,000 BBC The Office Group £35.00
The Walbrook Building, 23-29 Walbrook Street, EC4 50,500 Delancey and Area Property Partners GSMA £58.50
20 Fenchurch St, EC3 43,450 Land Securities and Canary Wharf Group DWF LLP £68.50
20 Fenchurch St, EC3 41,139 Land Securities and Canary Wharf Group Allied World Assurance Company Ltd  £68.50
Source: Lambert Smith Hampton

Central London office rents

  • The majority of Central London submarket rents in Q1 2014 rose when compared with Q1 2013.
  • Headline Q1 2014 rents in Mayfair reached £110 per sq ft, an increase from £95 per sq ft in Q1 2013.
  • Euston & King's Cross rents reached £65 per sq ft, up from £45 in Q1 2013. 

 

£2.71bn invested in Central London offices in Q1 2014

Central London offices remain the focus of the UK commercial property market, although there was a substantial decrease in quarterly investment levels. The total transaction volume was £2.71bn, a 65% drop compared to the £7.48bn transacted in Q4. This is unsurprising given the very large deals of the previous quarter making investment levels exceptionally high.

Yields well below long-run average

James McAdden, Associate Director, Central London Capital Markets, said: "West End offices returned 22% in the 12 months to March 2014. Capital growth accounted for 17% of this, of which 10% was due to inward yield shift. Transactional yields are around 3.5% for West End offices and 5% for City offices, both of which are well below the long-run average.

Investment volumes in London remain high

"Investment volumes in Central London remain high, although Q1 2014 was lower than Q4 2013, due to the absence of the two exceptional deals - More London and Broadgate Estate, totaling £3.4bn - that provided a major boost the Q4 figures."

For our latest report on the UK property investment market, read UKIT Q1 2014

Spotlight on the South Bank office market

  • The South Bank market continues its trend of strong growth with increasing demand due to its central location, main rail stations of Waterloo and London Bridge and varied leisure and retail offer.
  • Biggest transactions of 2013 saw News International acquiring 430,000 sq ft at The Place, Ogilvy & Mather take 216,000 sq ft at Sea Containers House and National Rail acquire 30,000 sq ft at Cottons Centre.
  • Take-up has increased to 1.8m sq ft, which is the highest level since 2007.
  • 1.1m sq ft of commercial property to be delivered around Waterloo station between 2017 and 2019. 

Read more about the South Bank office market

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David Earle

020 7198 2270

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David Earle
Head of Central London Office Agency

020 7198 2270

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