Highest levels of take-up in the City for four years

The City has seen its third consecutive increase in take-up, increasing 29% to 2.1 million sq ft in Q4, the highest since Q4 2005 when take-up reached 2.36 million sq ft. Total take-up for the quarter was 50% above the 1.3 million sq ft average quarterly take-up of the previous five years and notable for the absence of any deals in excess of 150,000 sq ft.

The largest letting of the quarter was to law firm Clyde & Co who took 144,000 sq ft at Minerva’s St Botolphs scheme. Other large deals included insurance company Catlin, who took 122,000 sq ft at Aviva’s 20 Gracechurch Street and Bank of China, who took 116,000 sq ft of the newly refurbished 1 Lothbury, which they bought for their own occupation.

Availability in the City increased again in Q4 to 11.7 million sq ft, 2 million sq ft of which is under offer, having remained reasonably static in Q3. The vacancy rate rose from 12.7% to 13.6%.

Dan Bayley, head of national lettings and sales, comments: “The last three quarters have produced some encouraging figures helped substantially by recovery from the banking and financial sectors who have accounted for 39% of space taken this quarter. The take-up is driven by a City market that is showing great value for money and that occupiers are confident enough of the future to strike deals

The West End has also seen marked improvement on the previous quarter’s performance with take-up increasing by 58% to 1.1 million sq ft, the highest take-up since Q3 2007 when take-up was 1.12 million sq ft. The latest quarterly take-up also exceeds the five year average of 820,000 sq ft.

The Docklands continues to play catch-up with the success of the City and West End. Take-up has increased between quarters three and four from just 14,000 sq ft to 260,000 sq ft. Supply saw an increase of 10% to 2.22 million sq ft and the vacancy rate increased from 10.3% to 11.4%, the highest average for over four years.

Dan Bayley concludes: “Even since the start of 2010, Blackrock have committed to 280,000 sq ft at Drapers Gardens at a headline rent close to £50 per sq ft. Supply of big buildings is dwindling, but there are not many new major movers coming to market. By the middle of the year, we should have established whether a new higher tone for prime City rents has been established, or whether the challenges of the wider economy maintain a barrier to rental increases across the board.”