Office take-up in London by the legal sector continued to slow in the first three quarters of last year, even as the city proved a standout for legal expansion when compared with other cities across the EMEA region.
A report by agent Devono found that even the combined total take-up across 2023 and Q1-Q3 2024 came in 6% behind the total in 2022’s blockbuster year, even as a report by Savills found London was the third most popular EMEA city for legal expansion.
The report by Devono found that leasing reduced quarter-on-quarter over the first half of 2024, as both came in behind the long-term quarterly average by 62% and 79% respectively.
Q3 saw a boost in take-up with the total at 264,053 sq ft – 80% higher than the volume leased over the entirety of H1 – boosted by a record quarterly high number of 17 deals. These were also for larger lot sizes, with the average for the quarter being more than double that of the average for H1 last year.
The report also found that 84% of respondents expected to maintain hybrid working patterns in 2025 and pointed to a mirror trend of deals for smaller spaces, with the average deal size reducing to 10,819 sq ft from 17,423 sq ft in 2023.
While average volumes shrank, average lease lengths lengthened to 8.4 years over the first three quarters of last year – 16% longer than the five-year annual average.
The report also found this average was longer when compared to the average of 7.4 years for space graded second-hand or below, showing that grade-A space draws longer commitments in the legal sector.
Yet, while pursuit of grade-A space by the legal sector has made up almost a third of all deals between 2020 and 2024, the report found leasing activity for the first three quarters of last year involved a more diverse range of buildings.
Just under a quarter of deals transacted were for grade-A spaces and the remaining three quarters were instead for prime second-hand spaces. The average lease lengths for prime second-hand spaces also rose from 5.8 years in 2023 to 7.4 years in the first three quarters of last year.
No deals during the period were for second-hand grade-B space – lower than the 9% registered in 2023 and much lower still than the 31% average between 2015-2019.
Location-wise, the City was dominant as it accounted for 80% of all take-up, while Midtown fell out of favour with just 14% of deals. Midtown’s EC4Y segment, ironically designated for the upcoming Justice Quarter, accounted for just 8% of deals, whereas it had previously accounted for 40% in 2023, according to Devono’s report.
Image © Jeff Blackler/Shutterstock
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