POST-REFERENDUM UPLIFT IN LONDON OFFICE TAKE-UP
- Take-up of London office space increased by 24% in July to 980,400 sq ft
- Boosted by three deals over 50,000 sq ft, and Wells Fargo 220,700 sq ft vote of confidence
The amount of Central London office space leased by businesses bounced back from a pre-referendum dip to reach 980,400 sq ft in July. This is 24% above the level seen in June and the strongest monthly average since March this year, according to CBRE, the world’s leading global real estate advisor.
Appetite for London office space was validated by three deals over 50,000 sq ft in July, including a major move by Wells Fargo for 220,700 sq ft of space in the City of London, at 33 Central, King William Street, EC4. The move has been widely seen as a vote of confidence from the banking and finance sector after the Leave vote in the EU referendum. The sector accounted for 31% of take-up in July, followed by the business services sector (22%) and creative industries (17%).
July’s office take-up in Central London remained below the 10-year average of 1.1m sq ft per month, but above-trend leasing activity in the City and Southbank suggests that businesses still see London as an attractive place to locate.
Available office space increased by 2% over the month to stand at 13.6m sq ft, but remained 7% below the 10-year average, as secondhand, completed and pipeline space continues to enter the market. The development pipeline is strong, but much is pre-let, with 46% of the 5.1m sq ft of space expected to complete before the end of the year already pre-committed to occupiers.
Office space under offer fell by 14% over the course of the month to stand at 3m sq ft as a number of large deals completed. However this remains 7% above the 10-year average of 2.8m sq ft; another indicator of strong demand.
Much has been said about the health of the London office market this year, but clearly demand for office space remains buoyant. Businesses are still confident about London’s significant advantages as a global business centre, even when the UK is outside the EU. This continued demand, mostly driven by key lease events, in a market with low supply, is maintaining headline rents at the same rate as in May and June.
Of course the jump in leasing activity is good news for the market, and whilst this is not universal across all sub-sectors of the London market, even with heightened economic and political uncertainty, longer term prospects remain promising.