Take-up of office space in the Greater London and South East region reached 648,000 sq ft in Q1 2024 – 35% higher than the same period last year, according to new data from Savills.
The company’s research shows a continuation of the ‘flight to quality’ trend, with 77% of Q1 leasing activity for Grade A space – above the 10-year long-term average.
The supply of offices being delivered to the market has fallen 6.5% since the end of 2023 and is 4% below the 10-year average.
Nine sub markets achieved new headline rents in Q1 2024 with average rental growth of 13% across the area. Crawley (42%), Maidenhead (35%) and Basingstoke (24%) recorded the highest growth.
Andrew Wilcock, head of Greater London and South East office agency at Savills, said: “We’ve started the year with a relatively high volume of lettings as corporates become more confident in their spatial requirements and workplace needs. There are still some challenging sub markets in terms of muted demand, however in the main we expect to see continued high demand from occupiers, especially for prime Grade A offices with a high level of amenity offer and excellent ESG credentials. As new headline rental tones are achieved and with an increasingly constrained development pipeline, the case for speculative development continues to strengthen.”
Robert Pearson, director in the Greater London and South East tenant rep team at Savills, added: “The data shows the majority of occupiers have a clear preference in the type of office accommodation they are seeking. In a lot of cases if occupiers cannot secure their ideal space then they will look to regear in the hope better quality space will come to market which matches their needs. With a severely constrained development pipeline we can see the supply demand imbalance will lead to further upward rental pressure for the best space.”
