There has been a substantial increase in prime rents in the West End of London during the opening quarter of 2017, according to a new report from Savills.
Research reveals that average prime rents in the West End reached £122.30 per sq ft in the first three months of the year. This was 11% greater than the level seen at the same time last year.
What’s more, this was above the previous high of £114.31 per sq ft in the final three months of 2007.
Records
A record rent of £190 sq ft seen in March in St James’ Square helped increase the average rent in Q1 to 11% above 2016’s average prime Grade A rent of £160.41 sq ft.
What’s more, the average Grade A rent in Q1 2017 was £85.03 sq ft, 10% above 2016’s Q1 average of £77.25 per sq ft.
The West End’s take up during the opening quarter of 2017 reached 1.05 million sq ft, a rise of 1% year-on-year and 10% greater than the 10 year average. This was driven by strong demand from the tech and media sector, which accounted to 22% of take up.
Stable Supply
Savills suggest that supply is still fairly stable, hitting 4.63m sq ft at the end of March. This amounts to a vacancy rate of 3.8%.
Brian Allen, director of the West End leasing team at Savills, noted: ‘The first quarter of the year has seen strong take up and rental levels in the West End, with the deal at 5 St James‘s Square helping prime Grade A rents to hit a ten year high.’[1]
‘Whilst headline rents remain strong there is some upward pressure on the level of incentives being offered to tenants, with the average rent free period on a ten year lease now 18 months, compared to the average of 13 months in Q1 2016. Nevertheless, the market remains robust,’ Mr Allen added.[1]
[1] https://www.propertyinvestortoday.co.uk/breaking-news/2017/5/prime-rental-levels-in-the-west-end-hit-a-new-record-high
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