Q3 take-up increased by 63% q/q and 145% compared to same quarter last year, although it was still 19% below Q3 2019 levels.
The largest deal of the quarter was at 1 Triton Square, NW1, where 312,000 sq ft was pre-let to Facebook on confidential lease terms. The building is currently under refurbishment, due for completion by the end of 2021. This helped the TMT sector take the largest share of take-up across Central London at 32%, a 10% q/q increase. The other two other sectors driving take-up have been Banking & Finance and Professional Services, which took 17% and 16% respectively.
Availability levels declined, fuelled by strong demand for Grade A space, a reduction in tenant space, and a limited development pipeline. Supply has dropped by c. 5% to 17.0m sq ft. This equates to a vacancy rate of 7.6% - above the long term average of 6.1%, but below the 7.9% recorded at the end of last year. Whilst still above pre-pandemic levels, tenant-led space on the market has decreased to approximately 17% of total supply (29% including service office space). Pre-lets accounted for 44% of total take-up, with the majority of space being either new developments or comprehensive refurbishments due for delivery in the coming year.
With Grade A stock levels limited, there is upward pressure on prime rents, particularly in the constrained West End market. With rising construction costs weighing on deliveries, and ESG issues becoming ever more important for occupiers, we expect prime rents to trend upwards for some time. Simultaneously, we expect secondary office values to face downward pressure into next year as occupiers increasingly target high-quality space in order to attract staff back to the office and address corporate sustainability requirements.