Desk prices for flexible offices in London have declined significantly year-on-year in the south-west London prime and City submarkets, according to new data.
Findings from Flexioffices, shared exclusively with EG, showed that the average desk price per month for south-west London prime flexible workspaces dropped by 43% to £465.50 in Q2 – the biggest drop in any submarket compared with the average desk rate for the same quarter last year.
Other notable declines during the period included locations in the City, where the Q2 average desk price fell by 19% year-on-year to £488.90.
By contrast, south-east London flex office prices surged by 47% to £266.80.
Overall, the Q2 figures depict relatively subdued demand for flexible offices in the past year. However, quarterly rises in some markets have underscored predictions for growth this year.
In London’s prime markets, prices averaged £571.55, 7% below the average for the same quarter in 2022, but up by 8% quarter-on-quarter.
The overall average desk rate in London has grown by 9% year-on-year to £561.50, but is down by 6% compared with Q1 this year.
How markets fared on a quarterly basis
The north-west London market suffered the worst quarterly decline in desk prices, with its average slumping by 37% to £208.20 compared with its Q1 equivalent.
However, eight of the 15 core London markets posted an increase in average desk rates in Q2 this year compared with the previous quarter. Notable spikes in desk prices on a quarterly basis included a 36% increase to £814.30 in the Euston and King’s Cross market and a 32% rise to £351.10 across prime east London flex offices.
Midtown flexible office desk prices were up by 29% quarter-on-quarter to £491.80, while the average equivalent in south-west London grew by 25% to £346.80.
Finance accounts for highest desk prices
The industry with the highest desk rate was finance within the West End market, at £979. That was followed by retail in the City, with an equivalent price of £902, and energy businesses in prime west London locations, with a desk rate of £833.
The report’s authors noted that both building numbers and desk rates were growing quarter-on-quarter in several markets, suggesting that “a steeper recovery curve is to be expected for the remainder of 2023”. Office spaces in the City, Midtown, south-west London and east London prime markets are in that category.
Lead-to-deal times have fallen in nine out of the 15 London markets, showing that customers are acting on decisions more quickly. However, researchers said overall lead volumes were softer than expected, suggesting that uncertainty still remains.
Overall lead numbers for London were some 18% below forecast seasonal levels for H1 2023.
Researchers said they expected the remainder of 2023 to continue showing growth in building numbers and desk rates, but “at a pace closely linked with broader macroeconomic uncertainties”.
“Once inflationary pressures start to ease and there is better outlook on future interest rate prospects, the significant pent-up demand… is likely to be released and we will experience a significant and sustained period of positive growth,” stated the report.
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