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Overview Q4 2014
The city centre office market ended on a high with take-up of 157, 568 sq ft in Q4 across 36 deals, making it the best performing quarter of the year, and 10% up on Q3.
The largest transaction of the quarter was a pre-let to lawyers Squire Patton Boggs, who committed to taking 32,382 sq ft at MEPC’s 6 Wellington Place. There was also a significant pre-let with DAC Beachcroft who signed for 24,800 sq ft in St Pauls House on Park Square.
The deal involving the highest rent of the quarter saw Handelsbanken agree to pay £26.00 psf for an 8,000 sq ft suite at NFU’s No1 Whitehall Riverside.
The out of town market came to life with 118,132 sq ft take up across 27 deals, a massive 200% increase on Q3.
Significant deals out of town included the letting of 23,685 sq ft to Search Laboratory at Blokhaus on West Park Ring Road, Horsforth and Tekla consolidating its Leeds operation into Synergy 27 in a deal of 20,395 sq ft.
Increased institutional interest in regional offices is driving yield comprehension.
There is circa 400,000 sq ft of new space due to be delivered by speculative schemes between December 2015 and June 2016 at Wellington Place, 6 Queen Street, Central Square and Sovereign Place.
TCS has also applied for planning consent for a new 70,000 sq ft office building on Whitehall Road at the gateway to its Whitehall Riverside development. This will be bolstered by several planned refurbishment schemes across the city centre.
There were two significant pre-lets to law firms in Q4. Occupiers with live requirements include B Sky B, Addleshaw Goddard, PWC and the NHS, and we expect further pre-lets in 2015.
Prime rents are rising and now stand at £26.00 psf. We expect the current dynamics of supply and demand to result in further rental growth on the new space currently under construction with quoting rents presently around £27.00 psf.