Midtown Office Market
Eclectic Tenant Mix Protects Market From Big Hit
Total take up of offices in Midtown in 2008 was 1.4 million sq ft, down 39% from 2.3 million sq ft in 2007. Take up in Q4 was down 47% compared to the same time last year, the lowest quarterly level since 2004.
The largest letting of the year took place at the newly refurbished New Brook buildings in Great Queen Street. Fladgate LLP pre-let 42,580 sq ft from Henderson Global Investors at £65.00 psf in May. However, a few months later, we recorded 40,508 sq ft taken nearby at the newly refurbished Centrium building on Aldwych by Takeda at £54.00 psf.
Availability in Midtown increased to 4.4 million sq ft at the end of 2008, a level not seen in over 10 years. Of this, 1.5 million sq ft is new or refurbished space. The largest new buildings to the market in 2008 include New Court, 48 Carey Street at 54,863 sq ft, Merdian House, 34-35 Farringdon Street at 42,101 sq ft and 1 New Oxford Street at 29,504 sq ft.
Second-hand space represents 48% of total available space and has increased in response to business failures and contractions in the face of continued economic uncertainty. The most significant second-hand space becoming available includes Mid City Place, 71 High Holborn at 37,970 sq ft. Available space is set to further increase during 2009 with CoStar Research reporting that just over 1 million sq ft is under construction, with 63% of this due for completion in 2009. Most notably 157,412 sq ft at Nexus Place and 106,692 sq ft at 1 Southampton Row. Beyond 2009, there is 392,596 sq ft due to be completed at Central St Giles in 2010 and 505,000 sq ft with planning permission not yet to break ground. However, compared with other Central London submarkets, future supply is relatively modest and should, to some extent, protect rents going forward.
