A string of high-profile leasing deals during early January has been welcomed as a longed-for sign of life in London’s office market – even as the ongoing Covid-19 pandemic presents fresh challenges.
At Lambert Smith Hampton, head of central London office advisory David Earle said that space under offer in the Square Mile stands at 1.1m sq ft, its highest level since last June, while active requirements stand at around 10m sq ft.
Philip Pearce, head of central London leasing at Savills, said the capital continues to demonstrate “a strong gravitational pull in the context of global cities”, adding: “Where some deals have been deferred they have not been cancelled, with a number of leasing deals that were postponed at the start of the pandemic now progressing.”
Top-end City offices are still attracting major occupiers and record-breaking rents, with US legal giant Latham & Watkins this week completing its landmark prelet for 200,000 sq ft at 1 Leadenhall Street, EC2.
That deal follows the news that Britannia Financial is to take three floors at the top of nearby skyscraper the Scalpel, as well as a record long-term City rent of £110 per sq ft being agreed for the top floor of the Cheesegrater.
Chris Vydra, executive director in CBRE’s City leasing team, said: “While the lockdown policy has effectively put the City market into a state of flux, those occupiers who understand the paucity of the very best unique spaces have made decisions to sign leases.
“The performance of the top end of the market will hopefully give confidence to landlords in the rest of the market to hold their pricing. However, the recent sharp increases in supply in the City may make that challenging.”
Lambert Smith Hampton’s Earle said recent take-up figures are “encouraging signs”, but added that broad market sentiment remains subdued: “Unless you have a drop-dead date to move by, occupiers are still taking time to evaluate their space requirements.”
In an interview with EG, Cushman & Wakefield president John Forrester predicted that reports of wholesale moves towards remote working were premature. He added: “Most companies now think that at some point the vast majority of workers will come to the office a number of times a week.”
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