Major pre-lets to Camden Council, who have taken 120,000 square feet at the Argent Development, Kings Cross Central and Debenhams, who have taken 160,000 square feet at British Land’s Regent’s Place have eaten into pipeline space, but take up of existing product fell by 30% in the third quarter of 2011, it reveals.
Despite the AirW1 development of 160,000 square feet completing ahead of schedule and with two substantial pre-lets, Grade A availability is still seeing downward pressure with Grade A availability falling by 30% year on year.
It indicates that named demand remains dominated by media and technology occupiers. ‘We have identified 2.4 million square feet of technology, media and telecommunications demand currently in the market place alone. The rise in rental levels, lack of Grade A supply and competition from non-traditional occupiers, is forcing high profile media tenants to seek space further east,’ said Guy Grantham, director of Research and Forecasting at Colliers International.
Lastminute.com has taken space in Derwent London's Johnson Building, EC1 and Saatchi & Saatchi is short listing a Midtown location for its new headquarters. Further significant deals are likely to be confirmed before the end of the year.
‘While active demand, the modest short term supply pipeline and a healthy level of lease events occurring in 2012, suggest an environment for growth, economic uncertainty remains the prime motivation behind the decision making process,’ said David Hume, head of tenant representation.
‘Transactions continue to be protracted with a rising number of occupiers looking to regear leases and renegotiate terms in their current premises. Nevertheless, there is still scope for further modest rental uplift at the top end of the market as lack of new supply rather than increased demand drives Grade A vacancy down further,’ he explained.
‘Kings Cross is increasingly on the radar of occupiers when considering their options. This momentum will only increase as more occupiers take pre-lets. This is typified by Google, who are in detailed discussions on purchasing up to four buildings totalling up to 800,000 square feet. The Telecommunications, Media and Technology sector is currently the engine room,’ he added.
