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.
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.
Prime rents in the West End hit record highs
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.’
‘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.