CBRE: Central London take-up in January slid 66% month-on-month

Office investment totalled £55 million in January, bringing the total for the last 12 months to £11.2 billion. Availability rose by 3% to 13.0m sq ft, remaining below the 10-year average of 14.2m sq ft. Under offers fell slightly to 3.4m sq ft (-2%) but remained above the 10-year trend of 3.2m sq ft.

At the end of the month there was 12.4m sq ft under construction across Central London, of which 56% was already let or under offer. Active demand was 7.8m sq ft at the end of January, compared to 7.7m sq ft at the end of 2019.

Following a strong end to the year, take-up across Central London in January was subdued, which is often expected at the beginning of the year. Take-up declined by 66% to total 566,500 sq ft, but active demand increased to 7.8m sq ft.

The month-on-month fall in take-up saw demand 13% below the January 2019 total. This took the rolling 12-month total to 12.8m sq ft; remaining below the 10-year annual average of 13.1m sq ft. The largest transaction of the month saw Google take 134,900 sq ft at Euston Tower, NW1, representing the majority of take-up by the creative industries during the month.

In total, the creative industries accounted for 35% of take-up, but the business services sector took a slight lead representing 36%. There were two additional deals over 25,000 sq ft in January; both from occupiers from the business services sector. Though take-up across all qualities of space was below trend, transactions for second-hand space drove space-takes during January due to its high supply.

However new and pre-let space accounted for 25% of take-up, as occupiers aspire to acquire space in high-quality buildings.

Following a fall in December, availability increased during the month, rising by 3% to 13.0m sq ft. Despite the slight rise, supply remained below the long-term average level of 14.2m sq ft (-8%). Central London supply continued to be dominated by secondhand space, which represented 10.0m sq ft (72%) of the total. During the course of the month, secondhand supply rose by 6% to 9.4m sq ft; above it’s 10-year monthly average of 8.7m sq ft.

Newly completed and new early marketed availability (supply that is not yet ready to occupy but will become so within 12 months) both declined during the month and both were below their 10-year trend levels. The Central London vacancy rate was 4.2%, up from 4.0% at the end of 2019.

james.wallace@realassetmedia.com