27 April 2016
Lack of Supply continues to restrict Take-up in South Bank. Big increase in Speculative Construction

Take-up for the first quarter totalled 235,751 sq ft, a slight increase [16.5%] on the previous quarter, but nonetheless significantly below the ten-year average of 297,370 sq ft.

Download our Q1 16 London South Bank Market Summary report

Leasing activity continues to be driven by DAMIT occupiers, with Zoopla undertaking the largest transaction of the quarter, securing 43,149 sq ft at One Courage Yard, SE1. In other notable deals, matchesfashion.com and advertising group Jellyfish LEASED 35,451 sq ft and 9,017 sq ft respectively at The Shard.

Supply remains extremely constrained in South Bank, with Availability at just 2.7%. There is currently just 508,325 sq ft available across SE1, and an additional 66,149 sq ft across SW8, SE11 and SE17.

The supply squeeze in SE1 shows little sign of easing, with construction starts on just 82,587 sq ft commencing during the first quarter, which when coupled with a limited existing development pipeline for 2016, shows future supply issues. Moving forward, the occupational market may see a shift to the SOUTH west, with construction on 475,000 sq ft of commercial space now underway at Battersea Power Station, in addition to 135,000 sq ft at St Modwen’s New Covent Garden Market.

Investment for the quarter totalled £94 million, which is a significant decrease [85%] on the 4th Quarter. Union Street Partners note that all nine transactions involved UK investors, and assets away from the riverfront in SE1.

Simon Smith, Partner, said:

“The lack of supply in SE1 makes South Bank a challenging market for occupiers, and will continue to frustrate Take-up for the rest of the year.

“Looking ahead, it will be fascinating to see how the less popular locations such as Bermondsey mature as occupiers are forced to look beyond London Bridge and Bankside, and how development around Vauxhall and Nine Elms expands the market west.”
Alastair Hilton, Head of Investment added:

“We are seeing a slowdown in investment activity across some sectors in Central London in the run-up to the European Referendum, and South Bank is no exception. South Bank has historically been the domain of the UK Investor and we are seeing this once again as the correlation with the strong occupational market continues.”

Download our Q1 16 London South Bank Market Summary report