Central London office take up fell by 22% quarter on quarter in Q2 2016 in the run up to the EU referendum, according to CBRE.
Occupiers secured 2.4m sq ft of space, the lowest level since Q3 2012 and 23% below the 10-year average of 3.2m sq ft.
The subdued second quarter followed high volumes at the beginning of the year, signified by five leasing deals exceeding 100,000 sq ft.
Under offers fell by 3% to 2.9m sq ft but remain high relative to the trend of 2.7m sq ft, the advisory firm noted.
The company recorded that while occupational activity waned in response to the political outlook, available space increased for the fifth consecutive quarter to 13.3m sq ft – still below the 10-year average of 14.5m sq ft.
A rise in second-hand, completed and speculative space has caused supply to exceed take up for the first time since Q4 2013.
Emma Crawford, head of London leasing at CBRE, said: “As we emerge from a quarter characterised by referendum uncertainty, it’s not particularly surprising to see some occupiers opted to delay decisions until the political storm had passed. While the referendum may be behind us, the political uncertainty continues, but the appointment of a new prime minster is already helping to steady the ship.
“We expect activity to remain subdued for the near term as the macro economic environment remains uncertain. However, the fundamentals of the market remain strong and ultimately will outweigh any short-term negatives. London’s size, the transparency of the market, the rule of law, the advantages of having the pound and the English language remain unabated.”
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