There is a depth to the West End office market that helps it to weather the market gyrations between the highs and lows of sentiment. For example, in the second quarter when the shortage of Grade A space grew, bringing a 30% decline in take up, second hand space took up the slack and grew strongly so that the total for the quarter was an average 102,190 sq.metres (1.1 million sq.ft.). Knight Frank reports that the vacancy rate is the lowest for three years at 5.6%.
That has pushed speculative development up by 10% in the second quarter. Richard Scott of Mellersh & Harding commented: “The market has been quiet in August but there is a lot of money chasing safe havens. The hedge funds and commodity traders are still seeking space.
Apart from the shortage of Grade A for letting, there is also the lack of top space for investment.” Among the Mellersh & Harding deals, there is the sale of a mixed use property at 73-77 Kings Road, SW3 to a private client of Concorde Capital for £13.5 million, a yield of 5.25%. While there is always a shortage of large development sites in the West End one that bucks this is the former Middlesex Hospital in Fitzrovia.
The consortium of Exemplar Properties, Aviva Investors and Kauphing has a new design for it with a mixed use scheme of 53,418 sq.metres (575,000 sq.ft.) that uses a mix of facades to merge with the surrounding area, rather than a modernist approach as proposed by MAKE. Part of the office content is designed to appeal to the media as befits the area while the residential space has been changed to 250 small private flats from 181 larger ones.
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