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CoStar Analysis: Leases longer in Southbank West than in Southbank East

By Erin Amon - Wednesday, June 13, 2018 15:23

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The average lease length has grown over the past five years in the Southbank West submarket while it has remained relatively stagnant in Southbank East, according to CoStar data. Since 2013, the average term Southbank West has more than doubled from just over three years to 7.5 years on average. The average in Southbank East hovered around six years before dipping to 5.5 years in the first half of 2018.

The chart shows the average term for office deals over 1,000 sq ft by year the deal was signed, illustrating that average lease lengths have been longer in the Southbank West submarket than in its eastern neighbour since 2015. For leases signed this year through June 12, those in the West submarket are more than 35% longer than those in the East submarket, on average. This represents a continued widening of the gap, which was 22% last year and essentially absent (1.1%) in 2016.

From 2014-15, the average lease length in Southbank West jumped from less than four years to eight. This change followed the start of the ongoing development which came after years of growing popularity in Southbank, which had been focused in the eastern half. With the new buildings, like the South Bank Central scheme and the redevelopment of the Shell Centre into Southbank Place, have come new, longer lease deals to more established international firms.

WeWork has been instrumental in this shift, signing 20-year deals at Two Southbank Place and South Bank Central in Q2 and Q3 2017, respectively. Other noteworthy long-term deals in Southbank West in the past three years include two 15-year leases by Etc. Venues at County Hall and DNV GL’s 12-year lease at South Bank Central.

Meanwhile, the average lease length in Southbank East has dropped below six years for the first time since 2013. There were a handful of five-year deals signed in the first half of the year including those of Hale at 20-22 Leathermarket Street and Bilende at 8 Holyrood Street.

At time of writing, the average office lease length for deals signed in the year-to-date in Central London is 7.1 years.

Please click for the latest Southbank East and West office submarket reports.

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