Market snapshot

Office Market Pulse Central London Q3 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)

Principal Place, EC2 431,000 Brookfield  Amazon  Pre-let 
Bankside 2 & 3, SE1 354,000 RBS Omincom U/O
10 Fenchurch Avenue, EC3 322,700 CORE/Greycoat M&G U/O
160 Aldergate Street, EC1 200,000 Mercer Estates DLA Piper U/O
3 Pancras Square, N1 158,000 Argent Havas Pre-let
Africa House, Kingsway 116,400 Freshwater Mischon de Reya Let
Sceptre Court, EC3 87,000 National Bank of Kuwait  London School of Business and Finance  Pre-let
Halo Building, Mabledon Place, WC1 81,000 Stanhope The Doctors Laboratory Let
125 London Wall, EC2 72,100 JP Morgan Lloyds Bank £42.50
99 Bishopsgate, EC2  48,800  Brookfield Deutsche Bank £52.50
240 Blackfriars Road, SE1  24,091 Great Portland Estates  Alternative Networks  Let 

6 Bevis Marks,     EC3

 10,325  AXA/Blackrock  Baron Jacobson Let
Source: Lambert Smith Hampton

Central London office rents rise

  • There has been a steady rise in rents across Central London submarkets in Q3 2014 when compared with Q3 2013, as supply continues to fall.
  • Mayfair and St James's rents hit £115 per sq ft.  

Investment remains high in London

Investment in Central London offices in Q3 totalled £3.34bn.  Notable transactions include the purchase of Wollgate Exchange in the City for £320m by Cathay Life, which marks the first purchase by a Taiwanese insurance fund since a change in their regulatory regime in April 2013, and the acquisition of 125 Old Broad Street by Blackstone, also for £320m.

Overseas money remains the driving force behind the market and it has accounted for close to 70% of all deals by volume in the first nine months of 2014. The strong competition for assets among buyers has pushed average transactional yields well below 5%.


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.  It is testament to this building and the local area that Estée Lauder has relocated to Fitzroy Place from its current headquarters in Mayfair.

With limited supply, we expect rents 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 development as evidenced by the forthcoming availability of 2 Stephen Street at £85.00 per sq ft.  As many as 250,000 people are expected to use the new station each day once Crossrail launches. 

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

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David Earle

020 7198 2270

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David Earle
Head of Central London Office Advisory

020 7198 2270

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