London’s Midtown moves forward on all fronts
27 July 2018
Office take-up across London’s Midtown rose by 43% in the second quarter of the year as the market experienced steady demand and declining supply.
Just over 631,000 sq ft of offices were leased in Q2 which was a significant uplift on Q1 and meant that 1.1m sq ft of Midtown space has been let in the year to date.
Farebrother Head of Leasing & Development, Jules Hind, comments: “There is steady demand across the market and a vacancy rate of only 3.4%. This level of vacancy equates to around 1.5m sq ft - well below the long-term average of 2.5m sq ft.
“The current speculative construction pipeline is only 1.1m sq ft but occupier’s appetite for high quality space is clear; over half the space let in Q2 was new or refurbished space.”
“We are monitoring over 560,000 sq ft of space which is currently under offer which should mean that these trends continue through to the end of the year.”
Occupier enthusiasm for Midtown was matched in Q2 by investors. The three months between April and June saw investment transactions reach £1.2bn which brought the half year total to £1.67bn. This is the second highest H1 volume since the market saw £1.75bn of deals transacted in the first half of 2014.
Farebrother’s Head of Investment, Alastair Hilton, reports: “The market had a relatively quiet first quarter but a string of substantial Q2 deals - including four above £100m - have contributed to the highest quarterly volume since Q4 2014.’
“In line with the rest of London, international capital is still the dominant factor. During Q2, overseas investors accounted for 85% of total turnover.”
The Midtown retail and leisure sector is still seeing strong levels of occupational demand, albeit a higher level of flexibility and creativity is often required to attract occupiers.
Farebrother Retail & Leisure Partner, Matt Martin, reports: “The UK retail and leisure sector has rarely attracted so much media attention; unfortunately, it’s been for all the wrong reasons.
“Whilst there is no denying the industry is facing significant challenges in some areas, it’s important to read between the headlines to understand how this really impacts property. There is a positive outlook beyond this temporary period of unrest, but change is vital to this process.
“The second Grimsey Review has gone some way to map out what needs to change, but delivering this vision will very much depend on political will - at a time when the Government already has a lot on its plate.”