Union Street Partners revises forecast for 2014 and predicts another bumper year for London’s fastest growing market
London’s South Bank is continuing its meteoric rise as London’s fastest growing market. While over 1.6m sq ft of office space was let in South Bank in 2013, it was feared that a paucity of new stock arriving through the pipeline would stall this momentum. However, with reports that Omnicom are under offer for 370,000 sq ft at Bankside 2 and 3, and a further 708,000 sq ft of New and Refurbished supply remaining on the market, 2014 looks likely to coming close to equalling last year’s record take up figures.
The total amount of office space let in South Bank in the 2nd Quarter of 2014 is 319,445 sq ft, representing the strongest 2nd Quarter Take-up since 2007, and 40% higher than the five-year quarterly average. Over 664,000 sq ft of office space has now been let in the market in the first half of 2014.
The figures, which represent a broad range of lettings from Howard Kennedy Fsi taking 54,500 sq ft at 1 London Bridge, SE1 to a host of transactions around 5,000 sq ft. Almost 70% of all the New and Refurbished supply that has been delivered since the beginning of 2013 has now been let. However, there is further hidden supply coming on to the market in the next two years, the most significant being Becket House on Lambeth Palace Road, SE1 where over 146,000 sq ft of Refurbished space is coming on the market following Ernst & Young’s relocation, with delivery of the refurbished space expected in 2016.
Julian Hind, Partner, Union Street Partners, said:
“At the start of the year we thought a worrying lack of Supply would curb leasing activity. However, with the imminent Omnicom letting and elsewhere developers and landlords being very quick to respond to soaring demand for space in the South Bank, and with new product and refurbishments coming through the pipeline, the market looks set to build on the staggering 1.6m sq ft let last year.
“However, while there is plenty of New Grade A space situated around London Bridge and an increasing volume of smaller Secondhand space, there remains a lack of mid-tier product space coming through the pipeline. There are also signs that Waterloo is ready to emerge from the shadows of its more illustrious London Bridge neighbour, with the recent green light given to both the Shell Centre and Elizabeth House.”
Mark Fisher, Partner, Union Street Partners, said:
“The South Bank is undergoing a major renaissance, with new development and rising occupational interest, and rising rents almost level pegging with Victoria and Midtown. Not long ago occupiers were driven south of the river purely on price, but now they are coming because they want to be here, and are prepared to pay for it.”
Investment transactions for the South Bank in the 2nd Quarter total £282.6m, bringing the total level of investment for the first half of 2014 to £2.15bn, representing a significant increase from £520m for the same period last year.
Alastair Hilton from Union Street Partners, said:
‘’Whilst More London represents the majority of this turnover, we know from our activity in the market that Investor interest remains extremely strong, with new entrants looking to access the South Bank. Liquidity is the challenge, however, the occupational activity will create opportunity. Southbank has historically offered short-term cyclical performance in reaction to the other key markets. As a market, it is evolving fast and with this latent value, Investors and Developers are now looking very much more long-term as we see South Bank offering more stable returns in the longer term.’’