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2018 Is The Year Of The Pre-Let In London Offices

Facebook's new London HQ at King's Cross Central

A lack of new offices being built and a decent level of demand means that 2018 is already a record-breaking year when it comes to London office pre-lets, according to Savills.

With the fourth quarter still to come, Savills said there have already been 20 pre-lets of 50K SF or more, compared to the previous high of 19 in 2016. Its figures count lettings undertaken before construction commences and also lettings during the construction phase.

On a square foot basis, there have been 2.96M SF of pre-let deals so far this year, compared to 2.74M SF in 2013.

Significant deals include Facebook signing for a 611K SF HQ at King’s Cross Central, The Chinese Embassy buying Royal Mint Court in the City for its own occupation and WeWork taking 130K SF at Aviation House.

“In the last decade never have we seen so many pre-lets being agreed as we are seeing in the City in 2018,” Savills City Office Leasing Director Stuart Lawson said. “Activity is being driven by a far greater spread of occupier as the City and its environs reinvents itself again and draws occupiers from across London, with tech and media firms among those making very significant long-term commitments to new buildings, alongside traditional City occupiers including those in the insurance and financial sectors.
“These occupiers are being driven by upcoming lease events, continued limited new developments coming on the market and, clearly, a long term belief in London.”

Savills said that pre-lets are spreading beyond their typical City home, with four of the 10 largest deals outside of the City. This was a result of “take-up being led by real estate-savvy global brands,” like Facebook and Sony, it said.