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London office market summary
- Occupier take-up increased 30% to 2.8m sq ft in Q3, driven by a small number of large commitments by key London occupiers and on space currently in the development pipeline. It was the highest level of occupier activity since before the pandemic and only 7% below the 5-year quarterly average.
- Overall central London availability increased from 9.4% to 9.6% in Q3. This small overall increase masks quite wide variances across individual sub-markets. Strong occupier activity in Q3 in sub-markets such as Mayfair and St James’s, Fitzrovia and Southbank has driven down availability. Other submarkets, such as Farringdon & Clerkenwell and Canary Wharf remain at historic peaks.
- Investment activity rose again to £3.3bn in Q3, up from £2.8bn in Q2. This was dominated by overseas investment with a clear preference for best-in-class assets, long leases and diversified tenants. Increased global competition for the finite pool of prime London assets points to some yield compression in Q4.
By the end of September, visits to the workplace had risen to their highest point since before the pandemic following ‘back to school’ initiatives from many employers. As businesses and staff find a new working rhythm, and competition for the best talent intensifies, the office has an important role to play, with our data suggesting that companies are acting decisively to secure high-quality space that fits with their business strategies.
Rhodri Phillips, Partner
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