Market snapshot

Office Market Pulse Central London Q2 2014

The recent case Marks and Spencer v BNP Paribas Securities Services Trust Company (Jersey) Limited and Another [2014] is a blow for commercial tenants with break clauses incorporated into their leases.

In this case, the tenant exercised the break clause and requested an apportioned refund of rent and other sums payable under the lease for the period after the break date until the next payment date.

Despite the High Court ruling the tenant was entitled to an apportioned refund the Court of Appeal overturned the decision as the break clause failed to include an express provision relating to the refund of rents paid in advance.

While this case is not welcomed by tenants, the outcome provides clarity in a highly litigated area and makes clear that tenants and their advisors must specifically include a provision in the break clause for the repayment of any rents paid in advance for the period after the break date in the event it falls between two payment dates.

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In this issue:

Key transactions in Central London Q3 2014


Size (sq ft) 

Landlord(s)/ vendor


Lease information (per sq ft)

10 Fenchurch Avenue, EC3 323,000 Generali Real Estate M&G Investments Pre-let
25 Churchill Place, E14 205,000 Canary Wharf Group European Medicines Agency Pre-let
2 New Ludgate, EC4 195,300 Land Securities Mizuho Pre-let
1 Fitzroy Place, W1 140,500 Exemplar & Aviva Investors Estée Lauder Pre-let
Tokenhouse Yard, EC2 130,000 Mitsui Fudosan & Stanhope ING Bank Pre-let
111 Old Broad Street, EC2 89,000 China Construction Bank China Construction Bank
Commodity Quay, E1 76,800 Max Property Group Clarkson Pre-let
25 Canada Square, E14 62,000 Canary Wharf Group International Power £33
Heron Tower, EC2 51,000  Heron International Salesforce 
1 Canada Square, E14  45,000  Canary Wharf Group European Banking Authority (EBA)   
Source: Lambert Smith Hampton

Central London office rents

  • There has been a steady rise in rents across Central London submarkets in Q2 2014 rose when compared with Q2 2013.
  • Mayfair and St James's rents hit £110 per sq ft.  

Investment volumes still high in London

Overseas investors are still the biggest buyers of London commercial real estate, investing £10.3bn in the first half of 2014 of which 70% was spent on Central London offices.

This has driven average transactional yields down to below 5%, a level at which they have been since the start of 2013.

For our latest report on the UK property investment market, read UKIT Q2 2014

Spotlight on the Noho office market

The area of Noho continues to be in high demand from TMT occupiers seeking accommodation in the heart of the West End. Headline rent levels have increased by 10.7% since Q3 2013, caused by a lack of supply and increased demand. Exemplar, Aviva and Kaupthing have provided grade A space at Fitzroy Place, which has set new rental levels for the area. The addition of Estee Lauder as an occupier will continue to place increased pressure on rents as other like-minded occupiers seek to relocate to the area.

With limited supply we expect rent levels to continue their upward trend towards a figure of £80 - £82.50 per sq ft by Q3 2015.

The Crossrail station at Tottenham Court Road is due to open in 2018, and will act as a major catalyst for increased growth and demand from occupiers in this locality, with an estimated 102,000 users using Tottenham Court Road Crossrail station each day, coupled with the existing 150,000 users of the existing underground station.

Recent transactions:

  • 1 Fitzroy Place, W1 – 140,500 sq ft let to Estée Lauder
  • Wells & More, 45 Mortimer Street, W1 – 15,673 sq ft (5th floor) let to Lionsgate UK at a headline rent of £75.00 per sq ft
  • Henry Wood House, 3 Langham Place, W1 – Self contained building of 70,500 sq ft sublet by LSH at a headline rent of £35.00 per sq ft

Want more information about this Snapshot?

David Earle

020 7198 2270

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David Earle
Head of Central London Office Advisory

020 7198 2270

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