Central London View - June 2018: West End Core office leasing voids

• Despite relatively healthy UK and global economic growth and 42-year lows in domestic unemployment, there remains a degree of uncertainty in the commercial real estate market driven primarily by Brexit concerns. 
• This has resulted in a focus on the mitigation of leasing voids from a landlord perspective, juxtaposed with nervousness amongst tenants over a reducing number of quality options in the pipeline.
• Our analysis of schemes completed in the last 10 years across the West End shows that the average leasing void to 85% commitment is almost 11 months, while in the Core market of Mayfair & St James’s, the period is 16 months. 
• Since the EU referendum, the West End Core has witnessed an above-average level of development completions, with almost 500,000 sq ft of new and refurbished space completed. 
• This level is 56% above what would have been expected at average levels.  Despite this, leasing voids on development space have been reducing.

West End Core leasing voids

• The chart above shows the number of months to reach 85% commitment for every West End Core scheme completed in the last five years. The trend line clearly demonstrates that leasing voids for development space in the West End Core have been reducing.
• At the end of Q1 2018, 80% of space completed in the West End Core since the referendum had reached 85% commitment, with a further 9% under offer (the majority of which has since been let).
• Our analysis suggests that only 11% of development space completed in Mayfair and St James’s since the EU referendum remains available to lease. 
• As we move through 2018, the relative lack of development space will continue to shorten leasing voids as tenants look to commit to space in the pipeline.