News

Central London office activity pulls ahead of 2023

News

Samantha McClary

21 October 2024

Offices

London

Leasing activity across central London offices is on the up, with figures for the year-to-date running some 5% ahead of 2023.

According to the latest figures from JLL, 2.8m sq ft of central London offices were let in Q3, with the West End performing particularly strongly.

Year-to-date figures total 6.6m sq ft, which is up by 5% on the same period in 2023 and 8% ahead of the Q1-Q3 five-year average.

JLL said the figures were bolstered by eight transactions in excess of 50,000 sq ft. The largest deal was BDO preletting 222,000 sq ft at the M Building on Oxford Street, W1, while L&G prelet 191,000 sq ft at Woolgate, EC2, for its new HQ.

Supply rose marginally over the quarter, which resulted in the overall vacancy rate increasing by 10bps to 8.6%. Supply in the City contracted for the fifth consecutive quarter, while the West End and east London increased.

The supply of new-build space was boosted by the completion of the 350,000 sq ft Turing Building, Stratford Cross, pushing new-build vacancy rates to 1.5%.

Speculative construction stood at just under 11m sq ft, with refurbishments accounting for more than half of this space at quarter end.

JLL said new-build schemes under way had attracted a higher rate of preletting, with 51% prelet, compared to 30% for refurbished space.

Despite the booming leasing market, the investment market remained challenging with just £1.3bn of offices traded in Q3. Year-to-date volumes total around £3.8bn.

UK investors have been the dominant source of capital so far this year, accounting for around half of all investment.

Looking ahead, JLL said both active demand and space under offer remain elevated and that this should lead to an uptick in the leasing market, with prime rental levels rising from their Q3 average of £147 per sq ft.

The agent added that sentiment in the investment market outlook was improving, with several high-profile launches over the quarter, particularly for assets of more than £100m. Trading volumes in the investment market are expected to recover next year.

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London offices

Leasing activity across central London offices is on the up, with figures for the year-to-date running some 5% ahead of 2023. According to the latest figures from JLL, 2.8m sq ft of central London offices were let in Q3, with the West End performing particularly strongly. Year-to-date figures total 6.6m sq ft, which is up by 5% on the same period in 2023 and 8% ahead of the Q1-Q3 five-year average. JLL said the figures were bolstered by eight transactions in excess of 50,000 sq ft. The largest deal was BDO preletting 222,000 sq ft at the M Building on Oxford Street, W1, while L&G prelet 191,000 sq ft at Woolgate, EC2, for its new HQ. Supply rose marginally over the quarter, which resulted in the overall vacancy rate increasing by 10bps to 8.6%. Supply in the City contracted for the fifth consecutive quarter, while the West End and east London increased. The supply of new-build space was boosted by the completion of the 350,000 sq ft Turing Building, Stratford Cross, pushing new-build vacancy rates to 1.5%. Speculative construction stood at just under 11m sq ft, with refurbishments accounting for more than half of this space at quarter end. JLL said new-build schemes under way had attracted a higher rate of preletting, with 51% prelet, compared to 30% for refurbished space. Despite the booming leasing market, the investment market remained challenging with just £1.3bn of offices traded in Q3. Year-to-date volumes total around £3.8bn. UK investors have been the dominant source of capital so far this year, accounting for around half of all investment. Looking ahead, JLL said both active demand and space under offer remain elevated and that this should lead to an uptick in the leasing market, with prime rental levels rising from their Q3 average of £147 per sq ft. The agent added that sentiment in the investment market outlook was improving, with several high-profile launches over the quarter, particularly for assets of more than £100m. Trading volumes in the investment market are expected to recover next year.