Derwent London has today reported a strong first quarter letting performance, reflecting the current appetite of the capital’s occupier market.
According to the group’s latest business update, the first quarter saw 225,400 sq ft of lettings secured, boosting turnover by £11.3 million per annum. This figure is already 23 per cent higher than takings for the whole of 2014, lowering vacancy rates within the group’s property portfolio from 4.1 per cent in December to just 1.9 per cent and indicating that high quality space remains in demand with businesses despite rising rent costs.
The group’s development activity also rose significantly during the period with 70,500 sq ft of space completed – all of which was let or exchanged. Furthermore, the group’s development pipeline rose to 933,300 sq ft, most of which is under construction and the remainder due to begin later this year.
Chief executive officer John Burns believes that the strength of central London’s property market and a number of exciting infrastructure projects have significantly contributed to gains within the group portfolio.
He says; “Our recent letting activity supports the Group’s confident view of the central London occupier market and the decision to proceed with two significant developments in Fitzrovia.
“In addition, the acquisition of 20 Farringdon Road EC1 will provide a substantial future redevelopment opportunity opposite a major Crossrail interchange.
“We continue to expect overall rental growth of c.6-8% across our portfolio, and we have seen property yields tighten further in the first quarter of 2015.”
Among the lettings secured by Derwent were the re-letting or lease renewals covering over 80 per cent of the space at Angel Square EC1. This was achieved in just two months, securing a 54 per cent increase in income in the short time since the purchase of the property. The newly refurbished office space at 1-2 Stephen Street W1 was also fully let within six months of completion.
The development completed since the end of the year is Turnmill EC1 where the offices are currently being fitted out by Publicis. Those on track are White Collar Factory EC1, 40 Chancery Lane WC2, Tottenham Court Walk W1 and 73 Charlotte Street W12. 40 Chancery Lane is already 96 per cent pre-let with good early occupier interest reported in the other developments.
As of the 31st December 2014, industry experts valued Derwent London’s commercial real estate portfolio at £4.2 billion, making the group the largest London focused real estate investment trust (REIT).