Office take-up across the South East and Greater London hit a five-year high in 2024, according to new data from Knight Frank.
Total take-up for the year reached 3.6m sq ft – 5% higher than in 2023 – with 888,049 sq ft of space transacting in Q4 2024.
Grade A office buildings accounted for 80% of all space taken in 2024 and approximately 60% of deals were completed in town centre locations where the supply of best-in-class space is most constrained.
Oxford (pictured) was the busiest office market overall, with 572,500 sq ft of take-up recorded – a 12% increase on 2023 levels. Reading was the second busiest location, recording 503,000 sq ft of leasing activity, up 13% year-on-year. The largest year-on-year increase was in West London, where annual take-up rose 159% to 458,500 sq ft.
There is currently 1.6m sq ft of speculative office space under construction across the South East and Greater London markets, which is due to be delivered over the next three years, and there is currently 4.9m sq ft of active office requirements and 13.2m sq ft of lease expiries over the next three years.
The South East and Greater London markets recorded £1.6bn of investment transactions in 2024 – up 25% on the previous year. Just under £650m of assets were purchased in the final quarter – a 154% increase on the previous three months, and the highest quarterly total for two years. Cambridge witnessed the highest volume of deals out of all the markets, with £192m of assets transacting.
Prime yields remained stable at 7% throughout the year, with the weighted average net initial yield of 8.9% across all transactions.
Roddy Abram, head of South East and Greater London offices at Knight Frank, said: “All landmark letting transactions, above 50,000 sq ft, recorded in 2024 was for space in new developments or comprehensively refurbished grade A buildings. The year witnessed 18 lettings in buildings still under construction, the highest annual figure since our records began, reinforcing that prime, best-in-class space remains highly sought after given that supply isn’t keeping pace with lease events. Office-first work policies are already the norm for businesses of all sizes and this is translating to companies upgrading corporate headquarters.”
Simon Rickards, head of national offices capital markets at Knight Frank, added: “The final quarter saw larger transactions materialise with two deals above £100m completing, which reflects greater confidence around pricing for prime assets and values bottoming out for most stock. The narrowing gap between buyer and seller expectations should translate to more assets being brough to the market and a subsequent increase in liquidity from institutional investors. Private capital will remain active to capitalise on a comparatively less competitive buyers’ market, with dollar-based investors enjoying a strong currency advantage against a weaker pound.”
