Market snapshot

Office Market Pulse Central London Q3 2013

In the third quarter of 2013, prime Central London rents have risen across the majority of submarkets when comparing with the same period of 2012.

In the capital markets, Central London offices were the main driving force in Q3, accounting for 70% of the £7bn of deals in London commercial property. Prime yields are now at their lowest levels since 2007.

Challenging how space can be occupied

Recent transactions in the Central London office market show landlords and their architects appear to be increasingly focused on listening to, and researching, tenant requirements when creating working environments, incorporating sustainability, energy efficiency and style.

This trend can be seen in the work of developers like Derwent, Great Portland Estates, Helical Bar, Stanhope and Land Securities challenging how space can be occupied by delivering offices with exposed ceilings, larger receptions, lightwells and sacrificing net lettable office space for outdoor terraces.

So why the change? Read the full article

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

In this issue:

Key transactions in Central London Q3 2013

Property 

Size (sq ft) 

Landlord(s)/ vendor

Tenant

Lease information (per sq ft)

The Place, 25 London Bridge Street, SE1 430,000 Sellar Property News International £50.00
Sea Containers House, 20 Upper Ground, SE1 234,000 Archlane Ogilvy & Mather £45.00
30 North Colonnade, E14 200,000 Fimalac and Hearst Corporation KPMG £42.50
Cannon Place, 78 Cannon Street, EC4 140,000 Hines CMS Cameron McKenna £46.00
10 Brock Street, NW1  87,500 British Land  Facebook  £60.00
Riverbank House, 2 Swan Lane, EC4  82,000 Man Group Field Fisher Waterhouse £47.50
62 Buckingham Gate, SW1 65,000 Land Securities Schlumberger £72.50
The Walbrook, 23-29 Walbrook, EC4  49,000  Jupiter Property Partners  Vanguard  £57.00
1-2 Broadgate, EC2  46,000  British Land and Blackstone  Royal Mail  £31.00

Central London office rents

  • Prime Central London rents rise across the majority of submarkets in Q3 2013 when comparing with the same period of 2012.
  • Headline Q3 2013 rents in Mayfair reach £110 per sq ft, an increase from £90 per sq ft in Q3 2012.

 

Central London office investment the driving force in Q3

London remains the market of choice. The volume of investment deals for London property this quarter is exceptional:  £7bn of the quarterly total of £11.6bn was for commercial property in the capital. This is almost double the half year total of £7.4bn and equates to quarter-on-quarter growth of 70%.

Central London offices account for 70% of deals

Central London offices were the main driving force in Q3, accounting for 70% of the £7bn invested in London commercial property.

James McAdden, Associate Director, Central London Capital Markets, said: "Central London continues to attract inflows of capital from around the world. IPD’s total return figures for September 2013 were 1.15%, whereas the West End outperformed at 1.48%. The 12 months to September showed total returns for UK offices of 8.8%, with the West End outperforming at 13%.

Prime yields at lowest level since early 2007

"In the West End, 8.8% of performance was contributed by capital growth, emphasising the weight of money attracted to London. Prime yields fell to circa 3.75-4.00%. Prime yields are now at their lowest level since early 2007."

For our latest report of the UK property investment market, read UKIT Q3 2013

Spotlight on the Marylebone office market

  • Traditional Mayfair occupiers seeking value are favouring the Marylebone and Noho areas due to the lower total occupation costs.
  • The first half of 2013 has seen 85,000 sq ft of pre-lets with rents at 95 Wigmore Street and 10 Portman Square now at £90 per sq ft.
  • Vacancy rates are at circa 3.5%.
  • Howard de Walden Estate has continued to be instrumental in Marylebone and has secured planning permission for around 140,000 sq ft of stock.
  • Conversion to residential is accelerating – planning applications to Westminster Council have doubled in the last 12 months compared to the previous period.

Want more information about this Snapshot?

David Earle

020 7198 2270

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David Earle
Head of Central London Office Agency

020 7198 2270

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