Take-up in the West End is poor and one reason for this is a mismatch between the expectations of landlords and occupiers. Helen Hamilton reports
T MARKET
the rents zip whimpers
8 June 2013
he £100 leasing deal is back in the West End, with the latest deals at prestige addresses in Mayfair reaching as much as £110 per sq ft. Indeed, lettings at £90-plus in the core West End are becoming almost common, with more deals at this level in
the first quarter than in the whole of last year, according to Tony Parrack of Edward Charles & Partners. What might seem cause for celebration is actually evidence of the perplexing state of the West End market. The £100 deals (see box) account for only around 25,000 sq ft, and the market otherwise put in a whimpering performance in the first quarter. West End take-up totalled 560,000 sq ft, down on the quarterly average and down from the 770,500 sq ft transacted in the same quarter last year, according to figures from EGi. There is new space under construction
in the West End: around 2.1m sq ft, including nine buildings of over 100,000 sq ft, but most of these are on the periphery, in Victoria or towards Euston Road. Space in these areas is slow to let, as the lacklustre take-up figures show. Daisy York of Knight Frank says there
are ample requirements for West End space even in the peripheral areas, and she attributes the low activity levels to a mismatch between the expectations of landlords and occupiers. “We are representing TMT occupiers looking for 20,000 sq ft plus and they are saying if you can get a five-year or a three-year break, then we’ll go ahead, but with the new schemes, landlords are holding out for 10-year leases,” she says. The difficulty for landlords is that they
are driven by financing and they need to get the longer leases because of the impact they have on a building’s value, says York, who adds: “It will be interesting to see how we resolve this dichotomy.” York and other agents say the rents
developers are seeking for new schemes are also deterring occupiers. At around £70
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