Central London Office Market Update Q4 2020
Central London take-up remained subdued in Q4 2020 reaching just 1.0m sq ft. Marginally up on the previous quarter (0.9m sq ft) but a staggering 69% down on the same period last year (3.1m sq ft).
This brings the 12-month rolling total to 5.9m sq ft, 52% below 2019 (12.4m sq ft) and below the long term annual average of 13.1m sq ft. This is the lowest annual take-up level since 2003. Despite the UK entering a second national lockdown in November, take-up totalled 0.6m sq ft in October and November, up from 0.5m sq ft in August and September.
The largest transaction to complete this quarter saw Netflix acquire 87,150 sq ft at The Copyright Building, 30 Berners Street, W1, on a nine year lease. Following this, City, University of London completed a lease at 33 Finsbury Square, EC2 taking 74,379 sq ft at £55.12 per sq ft. Demand for best quality space continued to dominate throughout the year with pre-lets accounting for a 22% share of take-up in 2020.
The Central London investment market has been impacted by the pricing uncertainty and lockdown measures that dominated much of 2020. Despite this, the investment market saw a resurgence in activity during Q4 2020 reaching £4.1bn across 54 transactions, however this was from subdued levels in the previous quarter (£2.4bn).
Although a surge of late deals were recorded towards the end of Q4, annual volumes reached £12.1bn in 2020. This is down 13% on 2019 (£13.8bn) and 33% below the long term average, falling to its lowest level since 2009. This indicates the current challenges to viewings and completing transactions due to COVID-19, but also landlords opting to postpone planned disposals until pricing uncertainty receded.