Prime West End rents reach new record high in Q1

02 May 2017

Average prime West End rents hit £122.30 per sq ft (£1,316 per sq m) in the first quarter of 2017, 11% above the levels seen in 2016 and exceeding the previous quarterly high of £114.31 per sq ft set in Q4 2007, according to Savills.

The international real estate advisor says that a record rent of £190 per sq ft (£2,045 per sq m) achieved in March at 5 St James‘s Square helped push the Q1 average prime rent to 11% above 2016’s average prime Grade A rent of £110.41 per sq ft (£1,188 per sq m). Similarly, the average Grade A rent in Q1 2017 hit £85.03 per sq ft (£915 per sq m), 10% above 2016’s Q1 average of £77.25 (£831 per sq m).

West End Q1 2017 take up reached 1.05 million sq ft (97,545 sq m), 1% up on Q1 2016 and 10% above the 10 year average. The tech and media sector was the most active in the market, accounting for 22% of take up, followed by professional services (19%) and insurance and financial services (16%). Savills says supply remains fairly stable, standing at 4.63 million sq ft (430,127 sq m) at the end of the quarter. This equates to a vacancy rate of 3.8%, its third month at this level.

Key deals include Conde Nast Publications acquiring the 9th floor totalling 26,836 sq ft (2,493 sq m) at The Adelphi, WC2 on a 10 year lease at a rent of £79.50 (£855 per sq m). Elsewhere, at Aberdeen Asset Management‘s 12 Hammersmith Grove, W6, Medidata acquired the top 9th and 10th floors totalling 29,106 sq ft (2,704 sq m), at a sub-market equalling rent of £59 per sq ft  (£635 per sq m).

Brian Allen, director of the West End leasing team at Savills, comments: “The first quarter of the year has seen strong take up and rental levels in the West End, with the deal at 5 St James‘s Square helping prime Grade A rents to hit a ten year high. Whilst headline rents remain strong there is some upward pressure on the level of incentives being offered to tenants, with the average rent free period on a 10 year lease now 18 months, compared to the average of 13 months in Q1 2016. Nevertheless, the market remains robust.“

 
 

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