Demand for City offices has reached a 14-year high as firms from outside the financial sector compete for space in the Square Mile.
Take-up increased by 39% to 3m sq ft in Q3, according to new research from Knight Frank. This is nearly double the long-term average of 1.7m sq ft per quarter.
The Q3 figure includes deals from large non-financial services firms such as Amazon’s 431,000 sq ft letting at Principal Place. The online retail giant also took 86,000 sq ft at Leadenhall Court, while London Business School acquired 88,000 sq ft at 40 Tower Hill.
Dan Gaunt, head of City agency at Knight Frank, said: “I see this as evidence of the Manhattan-isation of the City office market, where finance is now one of several sources of office demand now the square mile’s economy has drawn in a variety of new industries, as is the case in New York’s key office markets.”
The vacancy rate for City offices now stands at 7.3%, compared with a long-term average of 9.2%. Supply currently totals 8.7 m sq ft, well below its financial crisis peak of 13.4 m sq ft in Q2 2009.
