Mayfair market achieves highest office rent in biggest letting

Mayfair achieved the highest office rent in its biggest letting seen for two years this week when BlueBay Asset Management agreed to take the remaining four floors at Morley Fund Management and Grosvenor’s 77 Grosvenor Street, W1.

BlueBay Asset Management has acquired the remaining 36,000 sq ft on the first, second, third, and fourth floors at 77 Grosvenor Street, W1. The terms of the deal are a 15 year lease at a rent of £117 per sq ft for first, second, and third floors, and £110 per sq ft for the fourth.

Julian Woolgar, partner, west end offices, Knight Frank said: “77 Grosvenor Street has achieved the highest West End rent this cycle and this latest deal is significant for Mayfair as it represents the area’s biggest letting of the last 24 months. The strength of the financial sector is driving competition for best space and forcing deals higher. Furthermore, the deal was signed in just four and a half days.”

Tom French, Grosvenor commented: “We are delighted with the success of 77 Grosvenor Street. The leasing profile of the building is testament to the quality of the finished product. The level and size of this final transaction is significant in the current market.”

Henry Richardson, asset manager, Morley Fund Management added: “BlueBay Asset Management joins FL Group and Tristone Capital as tenants at 77 Grosvenor Street, a 57,500 sq ft Sheppard Robson designed building arranged over lower ground, ground and five upper floors.”

Research carried out by Knight Frank on the West End leasing market showed that in Q1 07 take-up increased to 1.6 million sq ft, the highest first quarter total for 12 months. This was the second highest take-up for two years and was driven by a 96% increase in grade A transactions. Active demand totalled 1.7 million sq ft, 11% higher than the long-term average. Vacancy rates now stand at 4.3%, the lowest for more than six years. It is believed that this will continue to drive rental growth across the market. Speculative development across the West end remained low at 1.1 million sq ft.

London’s West End continues to top the table for Prime Global Office Rents beating Hong Kong, Tokyo, Paris, and New York, according to Knight Frank’s Global Real Estate Report 2007.

Ranking Market
1 London, UK (West End)
2 Hong Kong
3 Tokyo, Japan
4 London, UK (City)
5 Paris, France
6 Moscow, Russia
7 Mumbai, India
8 New York City, US
9 Dublin, Ireland
10 Milan, Italy

Source: Knight Frank LLP

Knight Frank and CBRE acted for Grosvenor and Morley Fund Management; Jones Lang LaSalle acted for BlueBay Asset Management.