Knight Frank has published its latest quarterly Central London offices research. Following last year’s referendum, the consensus view in the Central London leasing market was effectively: demand will fall off but tight supply should act as a counter-balance. One year later, the market has surprised us. Demand is unexceptional but critically it has not tanked.
- Take up in Q2 was 3.2m sq ft, just above the long term average of 3.1m sq ft, this follows a Q1 figure that was spot on the long term average
- West End take up during the second quarter fell 20% from 1.5m sq ft in Q1 to 1.2m sq ft; however levels are still nearly 8% above the long term average
- City take up totalled 1.9m sq ft, up nearly 20% from the previous quarter and 57% up on the same quarter last year
- Take up in Docklands for Q2 totalled just over 50,000 sq ft, 71% above the previous quarter, however still remains well below the long term average of 228,000 sq ft
- Central London investment stock remained in demand, 4.25% and 3.50% in the City and West End markets respectively
“In the City, the rapid expansion of the flexible office sector led activity during Q2; the business-to business sector accounting for 31% of all take-up. Meanwhile, TMT occupiers remained active accounting for 28% of deals. These two sources of demand continue to help limit the effect of Brexit- related uncertainty in the financial sector.” comments Dan Gaunt, Head of City Agency Knight Frank.
“Overseas demand continues to dominate, but European buyers are now responsible for as much activity as Greater China buyers, at least in the City. Whilst we are confident the southeast Asian buyers will win the tug-of-war next quarter, the broadening of demand is a healthy sign.” said Nick Braybrook, Head of City Capital Markets.
