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Looking at total supply across the West End, last quarter’s supply jumped to a total of £4.3 million square feet of offices. Much of that was because of the construction of speculative schemes producing 590,000 square feet of vacant office space; however, this should be seen in context which shows that this figure amounts to only 4.7% of total stock that is vacant – and this is historically a very low percentage.
The other side of the coin is that demand has increased quarter on quarter so far during 2013 and this is an optimistic sign for the market. If we look at the active demand that there is in the market, in other words, those people out looking at offices for occupation, the space in question amounts to about £3 million square feet; and if we combine that with the total requirements for space – including those not currently actively looking but who will have events occurring within their lease in the near future, the total becomes around £5 million square feet of space.
In terms of the Mayfair and St James’s markets and how they may be impacting upon the markets around them, it is noticeable that demand has increased from the financial services sector and energy-related businesses. A good example of this is Devonshire House on Piccadilly, which had a large floor space that was however quite broken up. The landlord there has reconfigured and designed the building to provide grade-A offices in a range of sizes. As a result they have achieved lettings to five different organisations with rents ranging from £107 to £120 per square foot.
This means that good grade-A space is being soaked up in these areas, causing occupiers to look further afield in order to satisfy their requirements.
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.