Central London office lettings in May 2016

Central London office lettings in May 2016 recorded just under 550,000 ft of deals from 38 transactions during the month. The May figure represents a fall back from the 650,000 sq ft in April and 1.4m sq ft recorded in March as Brexit fears subdued the market further.

May was characterised by 10 office deals over 20,000 sq ft, including Mishcon de Reya at Weston House, High Holborn, WC1; Tata Consultancy at Northcliffe House, Kensington High Street London, W8 and Dentsu Aegis at 10 Triton Street, London, NW1.

IT services topped the table of lettings by sector, helped by the Tata Consultancy deal. This was followed by professional boosted by Mishcon de Reya’s letting. Media and business services are also performing well. Office deals under offer have risen to over 3.2m sq ft and include two large pending deals in the City. Over 40 separate deals are under offer, but seem dependent on the Brexit vote.

By area, the City accounted for only 21pc of the floorspace let in May. The West End had a better month particularly Victoria which saw 5 deals and the West End fringe which saw a further 5 deals. The pace further picked up in Midtown with over 200,000 sq ft let in 10 deals. Current London office demand is calculated to be around 4.6m sq ft in the City and 3.8m sq ft in the West End.

The volume of grade A (newly built or refurbished office space) let during the month reached only 70,000 sq ft (13% of the total), as transactions for newly developed or refurbished space suffered from the slowdown.

Current forecasts suggest that in the event of a Brexit vote, London office lettings will be curtailed for some substantial period, due to market uncertainty.

Metropolis and Cityoffices are tracking a potential 20m sq ft of central London office space completions between 2016 and 2018 in 100 schemes of over 20,000 sq ft.

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