In line with expectations, activity across Central London remained muted reaching just 0.9m sq ft in Q3 2020, 72% down on Q3 2019 and well below the long-term quarterly average of 3.2m sq ft.
This was the worst performing quarter since Q4 2002 and brings annual take-up to end September to 4.8m sq ft, which is 48% below the same period last year and down on the long-term average for take-up in Q1 – Q3 (9.7m sq ft).
Despite the inactivity evident in the wider market, there were still signs of occupiers making longer term commitments. The largest deal to complete this quarter was Baker McKenzie’s pre-let on the ground, 6th to 12th floors (152,690 sq ft) at DUO, 280 Bishopsgate, EC2 which is set for completion in the latter part 2021. The Office Group also completed a lease at 210 Euston Road, NW1 where the serviced office provider acquired the entire building (68,182 sq ft) for 20 years.
Although overall volume remains suppressed on recent years, the Central London investment market showed reasonable signs of recovery over Q3, largely thanks to a global flight to defensive investments and an easing of lockdown restrictions over the summer. Investment volumes reached £2.1bn in Q3 2020 bringing total volumes to end September to £6.9bn. This is down 19% on the same period last year and 43% below the long-term average.
A significant transaction that completed this quarter was LINK REIT’s purchase of The Cabot, 25 Cabot Square, E14 for £380m reflecting a NIY of 4.75%. Another notable transaction saw Singaporean investor Sun Venture purchase 1 New Oxford Street, WC1 for £174m. So far this year, there have been 14 transactions greater that £100m in Central London, in comparison to 19 during the same period last year.
Click to read CENTRAL LONDON OFFICE MARKET UPDATE Q3 2020
