Central London office occupiers seeking value – Cushman & Wakefield
Cushman & Wakefield says leasing activity in the market for office space in Central London is being driven by occupiers seeking more value for money. The firm says the balance of power remains in occupiers’ favour, with larger companies, in particular, taking the opportunity to “drive a hard bargain” and secure maximum value from landlords. C&W highlights the purchase by Google of 800,000 sq ft of Kings Cross office space for its new UK headquarters, which boosted overall take-up of Central London offices to 2.1m sq ft during Q1 2013 – significantly above the previous year’s first-quarter total of 1.5m sq ft. The Google transaction also made a significant contribution to the West End’s total Q1 2013 take-up of just under 1.3m sq ft – more than 75% ahead of Q1 2012. The media and technology sectors were responsible for 63% of West End offices transactions completed in the quarter, the firm notes. Guy Taylor, head of West End office agency at Cushman & Wakefield, says occupiers are broadening their search criteria as they seek good-value office accommodation. Meanwhile, in the City and Docklands, take-up reached 815,000 sq ft in the first quarter of this year, which is 13% above the Q1 2012 total. Here too occupiers are taking the opportunity to negotiate value from landlords. C&W says the insurance market was the most active City offices market in the first quarter, accounting for 18% of lettings. The Central London deal pipeline looks “promising”, says C&W, with about 1.9m sq ft currently under offer, broadly in line with the five-year quarterly average of 2m sq ft. Of this total, the City has 1.6m sq ft under offer, with 345,000 sq ft in the West End. The significant amount of space under offer in the City – 40% ahead of the five-year quarterly average – is partly driven by landlords of buildings with substantial letting voids being ready to offer “very attractive” financial terms in order to secure prospective occupiers, says Andrew Parker, head of city agency at C&W.