There was a significant increase in prime rents in the West End of London in the first quarter of the year, according to a new report.
According to Savills, average prime rents in the West End hit £122.30 per sq ft in Q1 2017, 11% above the level seen in the same period last year and exceeding the previous quarterly high of £114.31 per sq ft set during the final three months of 2007.
A record rent of £190 sq ft achieved in March at 5 St James‘s Square helped push the Q1 average prime rent to 11% above 2016’s average prime Grade A rent of £110.41 sq ft. Similarly, the average Grade A rent in Q1 2017 hit £85.03 sq ft, 10% above 2016’s Q1 average of £77.25 sq ft.
West End Q1 2017 take up reached 1.05 million sq ft, up 1% year-on-year, and 10% above the 10-year average, thanks partly to strong demand from the tech and media sector, which accounted for 22% of take up, followed by professional services and insurance and financial services at 19% and 16% respectively.
Savills says supply remains fairly stable, standing at 4.63 million sq ft at the end of the quarter, which equates to a vacancy rate of 3.8%, its third month at this level.
Brian Allen, director of the West End leasing team at Savills, said: “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.
“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.”