The great British summer may have been a washout this year but it has not dampened the spirits of London’s office occupiers, which have emerged in their droves with new lettings and requirements.
Fresh entrants ranging from travel agent Skyscanner and IT giant Tata Consultancy Services to oil majors Chevron and BP are on the hunt for office space across the capital, amid a return in confidence over the future of work.
Leading the way is Abrdn, the Edinburgh-based fund manager, which is nearing a deal for around 40,000 sq ft at CBRE Global Investors’ building Duo Spitalfields (pictured) at 280 Bishopsgate, EC2.
The company, formerly known as Standard Life Aberdeen, is looking to make the upcoming office scheme its new London headquarters in a move away from its premises at 1 Bow Churchyard, EC4.
Duo is co-owned by King Street Real Estate in partnership with Arax Properties. The partners are refurbishing the vacant former London headquarters of the Royal Bank of Scotland to provide 280,000 sq ft of office space.
Demand in the City
Also in the City, law firm Memery Crystal is part way through a stay-or-go consultation over its current base at 165 Fleet Street, EC4.
The firm, which is home to City of London Corporation planning chair Alastair Moss, has indicated that it does not yet have an active requirement, but a number of City agents believe it will eventually be out looking for around 40,000 sq ft of office space.
James Neville, City leasing partner at Allsop, said: “The City market has enjoyed significant demand over the summer period as businesses look to return to offices into the fourth quarter and offer staff a new environment in which to work.
“In particular, we are seeing significant interest in all new-build and prelet best-in-class stock, given the limited supply for new buildings completing between now and 2023.”
West End sees requirement boom
In the West End, BP is once again looking for a new 40,000 sq ft office. The oil major sold its current office at St James’s Square, SW1, last November to the Hong Kong-based Lifestyle International for £250m and took out a two-year lease extension while it looked for a new base.
However, the subsequent Covid-19 winter lockdown caused the company to temporarily call off the search. It has since instructed JLL on its hunt and is carrying out viewings again, with Grosvenor’s upcoming 65,000 sq ft office scheme at 65 Davies Street, W1, believed to be one of its primary targets.
Fellow oil major Chevron is also believed to be searching for about 15,000 sq ft of office space in the area, while IT and data giants Ascential and Tata Consultancy Services have launched requirements for 35,000 sq ft and 40,000 sq ft respectively.
Last week, EG revealed that Skyscanner was also looking for between 40,000 sq ft and 45,000 sq ft of space in the West End, following a fresh surge in demand for international travel.
It follows the news that Capital International is nearing a more than 200,000 sq ft letting at developer Sellar’s upcoming office scheme Paddington Cube, which is due to be completed by February 2022.
And, earlier in the summer, fintech company Smart Pension prelet the entire 44,500 sq ft at Native Land’s Marylebone office scheme OneThreeSix on a 15-year lease with a 10-year break, in one of the largest West End lettings since the pandemic began.
Confidence is returning
According to Savills data, active requirements in the West End have increased by an average of 8% every month since April, to reach 5.8m sq ft at the end of July. That compares with a five-year average of 4.3m sq ft.
The agent said there is also more than 1m sq ft currently under offer in the West End, which is 6% higher than the long-term average. The professional, tech and media, and financial services sectors made up the largest proportion of demand at the end of July, accounting for 28%, 24%, and 19% of requirements respectively.
Andrew Barnes, director of central London tenant representation at Savills, said: “Confidence is returning, and there continues to be a desire to acquire new or refurbished offices offering the highest-quality amenities for staff as employers look to provide the best offices for their staff returning to the office.”
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