West End office vacancy has remained unchanged 7th December 2011

West End office vacancy has remained unchanged over the past few months as take-up of existing space fell by 30% in the third quarter, reports Colliers International. Colliers’ Q3 West End occupier report find that major prelets to Camden council, which has taken 120,000 sq ft at the King’s Cross Central, and Debenhams, which has taken 160,000 sq ft at British Land’s Regent’s Place, have eaten into pipeline space, but take-up of existing product fell by 30% in Q3 2011. Q3 2011 – 1.18m sq ft Q2 2011 – 1.25m sq ft Annual Totals 2011 to date – 3.7m sq ft 2010 – 4.3m sq ft Colliers reports that total take-up to date is 3.7m sq ft, down from 4.3m sq ft in the same period last year. Take-up in Q3 2011 is 1.18m sq ft, down from 1.25m sq ft last quarter. Colliers added that this came despite the AirW1 development of 160,000 sq ft completing ahead of schedule and with two substantial prelets, Generation Investment Management taking 23,000sq ft and O2 parent Telefonica under offer on 70,000 sq ft. Grade A availability fell by 30% year on year on the period. Halfords Media have also identified AirW1 as a potential option for its 40,000 sq ft requirement. Named demand remains dominated by media and technology occupiers. Guy Grantham, director, research and forecasting, said: “Colliers International has identified 2.4m sq ft of technology, media and telecommunications demand currently in the market place alone. The rise in rental levels, lack of Grade A supply and competition from non-traditional occupiers, is forcing high profile media tenants to seek space further east. “Lastminute.com has taken space in Derwent London's Johnson Building, EC1 and Saatchi & Saatchi is shortlisting a Midtown location for its new HQ.” Further significant deals are likely to be confirmed before year end. Pimco has signed for 57,000 sq ft at 11 Baker Street, W1 and Nokia is under offer on 60,000 sq ft at 2 Kingdom Street, W2. Ogilvy & Mather has a requirement for 175,000 to 200,000sq ft and has shortlisted two buildings. David Hume, head of tenant representation at Colliers International, added: “While active demand, the modest short term supply pipeline and a healthy level of lease events occurring in 2012, suggest an environment for growth, economic uncertainty remains the prime motivation behind the decision making process. “Transactions continue to be protracted with a rising number of occupiers looking to regear leases and renegotiate terms in their current premises. Nevertheless, there is still scope for further modest rental uplift at the top end of the market as lack of new supply rather than increased demand drives Grade A vacancy down further. ”King’s Cross is increasingly on the radar of occupiers when considering their options. This momentum will only increase as more occupiers take pre-lets. This is typified by Google, which is in detailed discussions on purchasing up to four buildings totalling up to 800,000 sq ft. The Telecommunications, Media and Technology sector is currently the engine room.”