Serviced offices dominate take-up in 2015
16th February 2016
Serviced office providers accounted for 15% of central London take-up in 2015, according to a new report by Bilfinger GVA.
The company’s central London office analysis posted serviced office take-up at 1.5m sq ft, up by 36% from last year.
In a landmark deal last year, WeWork, advised by Cushman & Wakefield, took 108,576 sq ft at 2 Eastbourne Terrace, W2. Bilfinger GVA let the office on behalf of Rio Tinto, which returned to its former headquarters in St James’s Square, W1.
Patrick O’Keefe, head of London agency and investment at Bilfinger GVA, said the rise in take-up from serviced office providers indicated a “seismic shift” in the nature of central London office demand.
He added: “Demand being driven by a growth in new start-ups and self-employment, a burgeoning technology sector and the changing demands of a young workforce that requires flexibility and opportunities for networking.”
The firm reported strong rental growth for west London in Q4, with Hammersmith, Kensington and Paddington all seeing growth of around 5%.
O’Keefe said the declining supply of small suites in the West End, which have been lost to residential conversions, and the dominance of large developments in the City, have boosted demand.
According to the report, supply is now as low as it was in “the last trough of the supply cycle”.
Prelets fell from 3.5 m sq ft in 2014 to 2.2m sq ft in 2015, owing to a small development pipeline and developers’ increasing confidence in spec schemes.
The report also shows a 0.5% increase in prime West End rents in Q4 and a 4.7% rise on the year, the weakest annual growth since Q2 2010.
In the City, prime rents increased by 2.4% during Q4 of 2015, up by 10.5% on the year – the highest level of annual rental growth since Q1 2011.
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