The Docklands area, encompassing Canary Wharf, has long attracted a variety of large occupiers, seeking a combination of high quality offices with large floorplates at a discounted rate compared to the West End and City.
Demand levels in 2018 were strong, reaching 0.75m sq ft as of end-Q3 2018, 35% up on average levels. Two deals over 100,000 sq ft helped to provide this significant uplift to take-up levels; BGC Partners took 130,000 sq ft at 5 Churchill Place, while 113,000 sq ft at The Cabot, Cabot Square was taken by the Competition and Markets Authority (CMA).
In addition to this commitment from the CMA, a number of other major government departments have committed to taking space in the Docklands in an attempt to cost save, including The Government Property unit. This has gone some way towards diversifying the occupier base, but this has also been impacted by the number of Media Tech companies who have also chosen to relocate here.
The emergence of these occupiers has been coupled with Banking and Financial occupiers rationalising their office needs following the EU referendum. As a result, the vacancy rate stands at 9.3%, up from 5.5% before the EU referendum, but down from its peak in Q2 2018 at 11.1%. It has also led to an increase in second-hand tenant space.
That said, the arrival of The Elizabeth Line later this year will greatly improve Docklands connectivity with the rest of London and should encourage more businesses to consider moving further east where they might not have before. It will also improve the retail amenity on offer, adding approx. 115,000 sq ft of new retail space.
The completion of Wood Wharf will also add a brand new district to this area, offering new residential, retail and commercial space, while the development of The International Quarter, Stratford, has provided further incentive for occupiers to consider relocating. Indeed, the scheme has seen several high-profile tenants take space, including the charity Unicef.
Retail opportunities in Stratford also remain popular, with a recent report by GlobalData placing Westfield Stratford as second in a table of the UK’s best-performing shopping centres – only narrowly outdone by its counterpart in West London. This is particularly positive to see against the backdrop of shopping centres once again being the weakest performing physical retail format in Q3 2018, with the number of shoppers falling by 2.4%.
That said, the UK consumer has continued to shop and indeed outperform forecasts; retail sales grew by 1.2% in the third quarter. This figure was boosted by sales of jewellery, clothes and household goods. It is to be anticipated that the delivery of a number of new retail units across the east of the city will encourage more consumers to the area over the coming months and years.
This article was featured in New London Quarterly Winter 2018/19 edition.
