The Central London office leasing market is on track for a new post-Covid ‘normal’ level of annual take-up activity, according to the latest data from Cushman & Wakefield.
In Q3, Cushman’s figures show 2.56m sq ft of space was leased – a 41% uplift on Q2 – with Grade A space accounting for 71% of activity. Activity in Q3 was 14% ahead of the five-year quarterly average.
Q3 also saw the volume of space under offer increase to 3.67m sq ft across Central London – 22% above the five-year quarterly average. Cushman estimates 60% of this space will close by year-end, taking annual take-up to circa 8.5m sq ft, which is on par with the figure recorded in 2021.
The biggest increase in leasing activity in Q3 was in the City which accounted for 64% (1.64m sq ft) of overall take-up, followed by the West End, which took a 29% share with 741,464 sq ft transacting.
Heena Gadhavi, from Cushman & Wakefield’s UK research and insight team, said: “As we head into the final months of the year, it is positive to see an increase in overall leasing activity across the Central London occupational market with Grade A office space continuing to pick up momentum and drive activity.
“However, with economic fundamentals set to continue to impact Central London offices throughout the remainder of 2023 and into 2024, we’ll see occupational and investment markets sit at opposite ends of the spectrum. As businesses attempt to find the balance in a hybrid working environment, the imperative lies in both high-quality spaces that increasingly meet ESG demands, alongside assets that are priced sensibly and offer value-add opportunities.”
Ben Cullen, head of UK offices at Cushman & Wakefield, added: “Occupier demand for office space within Central London remains robust. Looking to the full year, we expect approximately 8.5m sq ft of take-up, which, despite a challenging business environment, indicates a healthy occupational market. Our outlook for the London office market is positive.”
