Financial firms take London office leasing higher
London’s office leasing activity is still being held back by the effect of hybrid working patterns, but agents see reasons for optimism in the more resilient parts of the market.
Research from Savills found central London’s office leasing activity rose to 2.3m sq ft between April and July, a 9% rise compared to the second quarter of 2023. That left the first-half figure at 4.1m sq ft across 356 transactions, a 3% uplift year-on-year.
These figures were, however, 12% below the long-term average and slightly below medium-term expectations, which the agency attributed to the ongoing effect of occupiers offering staff hybrid working options.
London’s office leasing activity is still being held back by the effect of hybrid working patterns, but agents see reasons for optimism in the more resilient parts of the market.
Research from Savills found central London’s office leasing activity rose to 2.3m sq ft between April and July, a 9% rise compared to the second quarter of 2023. That left the first-half figure at 4.1m sq ft across 356 transactions, a 3% uplift year-on-year.
These figures were, however, 12% below the long-term average and slightly below medium-term expectations, which the agency attributed to the ongoing effect of occupiers offering staff hybrid working options.
The West End market performed poorly, with leasing standing at 37% below the long-term average over the first half, while the City remained resilient with a 1% increase on its long-term average.
Standout deals included Citadel’s prelet of 248,533 sq ft at British Land’s 2 Finsbury Avenue, EC2.
The 10,000-15,000 sq ft range hit its highest number of transactions since the pandemic with 50 deals.
Sustainability continued to motivate leasing choices, as more than half of take-up consisted of lettings in buildings rated BREEAM Excellent or Outstanding, with an additional 16% in BREEAM Very Good buildings.
The insurance and financial sector emerged as the primary driver of leasing activity in H1, accounting for 31% of the take-up, equating to more than 1.2m sq ft. Tech and media also saw a boost in activity, accounting for 17%.
Around 21% of occupiers relocating in H1 were moving out of serviced office spaces, new entrants to the central London market, or previously based in offices around Greater London.
Philip Pearce, head of Savills’ central London agency team, said the results highlighted “resilient demand” in the market “despite the ongoing challenges posed by hybrid working patterns”.
He added: “The clear preference for sustainable buildings and the continued interest from diverse sectors, including financial services and tech and media, underscore the dynamic nature of the central London office market.”
Image from British Land
