A rush of smaller leasing deals has pushed London’s office market to new heights.
Some 590 companies signed new office lettings in London over the course of 2022, an annual high, according to the latest London Moves report from Cushman & Wakefield. Companies upsizing and downsizing both stood at record levels.
Smaller deals – those for less than 25,000 sq ft – were on the rise, up by almost 60% year-on-year, while fewer moves for space of more than 100,000 sq ft were recorded than in the past.
Some 63 businesses were classed by Cushman as new entrants to the market, meaning that they had either struck their first office lettings or had moved into London from elsewhere. The City and the West End each attracted 30 such tenants.
East London saw three new occupiers over the year, its highest number since 2016. Cushman described life sciences real estate developer Kadans as a “standout occupier” in the area.
Despite a record 377 tenants moving to larger premises, not all businesses were scaling up. A total of 96 businesses contracted their space, equating to a net loss of 2.09m sq ft across the market, including GSK, Citigroup and Hogan Lovells.
In the sub-25,000 sq ft market, 78 consolidations were recorded, equating to a total net reduction of 715,226 sq ft. Manufacturing and energy, and banking and finance, drove the trend with the former recording a 656,842 sq ft loss of space across six occupiers. In finance, 14 occupiers downsized floorspace by a combined 579,474 sq ft.
The agency said emerging clusters include the South Bank and Hammersmith, both of which have seen an uptake in leasing following limited investment activity since 2020.
The South Bank has seen nine schemes totalling 781,580 sq ft completed since 2020, with 60% pre-let or under offer at their time of completion. A further 700,000 sq ft is under construction across five developments.
Similar trends were apparent in Hammersmith, with leasing activity rising over the past three years on the back of 415,000 sq ft of space being delivered pre-pandemic. There is now 250,000 sq ft under construction, with Cushman saying the area is a likely area of interest for investors.
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