London Q3 office take-up buoyant as occupiers show preference for new space

  • New or pre-let space represented nearly half of all take-up in Q3 (47%)
  • Creative industries led the march on take-up for Q3
  • Under offers saw 25% quarterly increase in the West End

Take-up of office space in Central London continues to be resilient according to Global real estate advisor CBRE. The third quarter of 2018 saw take-up reach 3.4m sq ft, which is above the 10-year average of 3.1m sq ft.

The year-to-date take-up total reached 9.8m sq ft, higher than both 2016 and 2017. The largest deal of the quarter saw Facebook acquire 600,600 sq ft across two proposed developments in King’s Cross. There were a further four deals over 100,000 sq ft in Q3; two of which were in the City and two in Docklands.

Driven by the Facebook deal, the creative industries represented the largest proportion of take-up in Q3 at 41%, followed by business services (23%) and banking and finance (20%). Business services take-up was led acquisitions by flexible office operators, the largest of which saw WeWork acquire 52,300 sq ft at 1 Waterhouse Square, EC1. Over the last 12 months, flexible office operators have acquired a record 2.4m sq ft in Central London.

Under offers in Central London reached 3.9m sq ft in Q3 2018, an annual increase of 21% which is significantly higher than the 10-year average of 2.9m sq ft. The largest unit under offer at the end of Q3 was at 5 Merchant Square where 159,200 sq ft of space is under offer to a confidential occupier on a sublet from Marks & Spencer.

Under offers were above trend in all Central London markets. Over the course of the quarter, under offers increased in the City (+4%), West End (+25%) and Southbank (+1%).

Active demand in Central London was 9.7m sq ft at the end of Q3 (Q2: 9.3m sq ft). The largest proportions of active demand are from the banking and finance sector (28%) and the creative industries sector (21%).

Emma Crawford, Managing Director, London Leasing at CBRE
Q3 saw a resilient performance across the London office market, with requirements for space from the banking and finance sector proving exceptionally strong. In what is a continuing trend, occupiers showed a vigorous preference for new space across the quarter, with new or pre-let space representing nearly half of all take-up, taking it significantly above the 10-year average.
Emma Crawford, Managing Director, London Leasing at CBRE