Despite the inactivity evident in the wider market, there were still signs of occupiers making longer term commitments. The largest deal to complete this quarter was Baker McKenzie’s pre-let on the ground, 6th to 12th floors (152,690 sq ft) at DUO, 280 Bishopsgate, EC2 which is set for completion in the latter part 2021. The Office Group also completed a lease at 210 Euston Road, NW1 where the serviced office provider acquired the entire building (68,182 sq ft) for 20 years.
The third quarter of the year saw a continuation in the trend witnessed in Q2 whereby the Professional Services Sector now makes up a 27% share of 2020 take-up to date, up from a share of 12% in Q3 2019. The Media Tech sector and Services sector equally followed taking a 15% share. Lack of larger deals has meant that SME demand has continued to drive take-up levels in 2020 with 57% of transactions comprising <5,000 sq ft spaces.
A combination of the slowdown in the leasing market and the increase in second-hand space was reflected in a rise in vacancy across Central London. At the end of September supply reached 14.4m sq ft across Central London equating to a vacancy rate of 6.4%, which is above the long term quarterly average (6.3%). In Q3 2020, tenant space settled at 3.9m sq ft, equating to 27% of total supply and up on the same period last year at 14%. Since Mid-March, when lockdown began there has been an additional 2.2m sq ft of tenant supply delivered to the market and this trend is expected to continue throughout the remainder of this year. COVID-19 related construction delays have resulted in only 3.8m sq ft of developments set for completion in 2020. 57% of that has already been pre-let.
Prime rents have fallen across the majority of submarkets in Central London as a result of relatively high levels of supply, which has accumulated during and since the market lockdown and weaker demand. The City has witnessed a fall in prime rents standing at £70.00/sq ft, down from the previous quarter at £72.50/sq ft.