Office occupiers in Greater London and the South East are prepared to look further afield to secure prime Grade A office space offering a strong amenity provision and sustainability credentials, according to new data from Savills.
The company found that in the last two years on average occupiers relocated 4.7 miles to prime Grade A office space, which was above the average of 3.3 miles for lower quality properties, with 40% of occupiers relocating to a new town to secure best in class space.
Savills said that due to the current limited availability of large Grade A office schemes in Greater London and the South East, with only five submarkets in the region currently having three or more buildings able to satisfy requirements of more than 50,000 sq ft, occupiers would look to activate requirements earlier and this would in turn fuel greater levels of pre-letting in the medium term,
Stuart Chambers, director in the Greater London and South East office agency team at Savills, said: “This research demonstrates that occupiers are increasingly prepared to extend their area of search in order to secure prime Grade A office space that has strong ESG credentials and a broad amenity offer. This trend was evident in 2022, with 68% of take-up recorded being Grade A standard, which was the highest proportion since 2018.
“Additionally, landlords who deliver prime Grade A office space will benefit from the improved demand prospects for this product as well as significant rental growth. Occupiers are generally less rent sensitive and this was evident in 2022 with 11 sub-markets achieving record high headline rents.
“Furthermore, on average, the rent per sq ft paid by occupiers increased by 37% when compared to their previous lease, highlighting that occupiers are prepared to pay premium rents to secure the best quality office space. Despite the subdued take-up experienced in Q1 23, the prospects for improved corporate activity is positive with 23 requirements over 20,000 sq ft and 14 over 50,000 sq ft.”
