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Office leasing volumes in Central London continue to defy post-Brexit gravity — but take-up figures hide a dirty secret.
The amount of space landlords are having to give away rent-free to attract tenants has more than doubled since the beginning of 2016, according to data from Colliers International.
Take-up rose for the fifth consecutive quarter in the three months to October, totalling 3M SF, above the 10-year average.
But at the same time rent-free periods rose from 21 months to 22 to 24 months in the West End and from 24 months to 24 to 26 months in the City.
Vacancy rose to 5.5% or 11.9M SF, and Colliers predicts both this and rent-free periods have peaked if demand maintains its current level, with supply set to reduce in the next couple of years.
“Landlords and developers will be encouraged that take-up has risen above the 10-year quarterly average for the first time in 18 months, but there is still caution over pricing,” Colliers International Director of Research and Forecasting Guy Grantham said. “While the availability of new space has continued to decline, occupiers remain focussed on value and on maintaining a priority on cost control.”
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