City take-up by serviced office providers falls by half

Take-up by serviced office providers has plummeted in the City of London, accounting for just 9% of space leased so far this year, compared with 18% for the same period last year, Savills has reported. Instead, take-up has been dominated by the Chinese Embassy agreeing to occupy Royal Mint Court, EC3, along with the public sector, education and health, which accounted for 19% of space. For the full 12 months to the end of June, overall lettings in the City of London reached 3.5m sq ft, 10% up on the previous 12 months and 31% up on the 10-year average, Savills said. Occupiers favoured the City core, which accounted for 68% of lettings, over City fringe areas, leading to an even greater gap in rents between the two submarkets. The average grade-A rent in the City core at the end of the second quarter was £63.55 per sq ft, compared with £58.23 per sq ft in fringe areas. It is the largest difference recorded by Savills since 2014. Total City supply stood at 7m sq ft at the end of Q2, equating to a vacancy rate of 5.6%, comparable to the same point last year and down on the long-term average of 6.6%. “The City leasing market got off to a strong start in 2018, and the diversity of occupiers and requirements in the marketplace signals a positive H2 ahead,” said Philip Pearce, head of the central London office agency team at Savills. To send feedback, e-mail Louise.Dransfield@egi.co.uk or tweet @DransfieldL or @estatesgazette