Take-up of office space in Central London fell by 8% last year to 9.62m sq ft, according to new data from Cushman & Wakefield.
However, the annual take-up figure was 7% ahead of the five-year average of 8.96m sq ft thanks largely to a surge in activity in Q4, which saw 3.32m sq ft of deals complete – the strongest quarterly volume since Q4 2018.
The City accounted for 66% of Q4 take-up with 2.21m sq ft traded, of which 76% was Grade A space. This was more than double the West End volume, which saw take-up of 1.08m sq ft – 73% Grade A.
Grade A office space accounted for 70% of annual take-up and the flight to quality has added pressure on supply, which continues to be constrained with the volume of new developments speculatively under construction after 2025 reducing significantly.
Cushman & Wakefield said tracked active demand for Central London office space reached an all-time high at the turn of the year.
Ben Cullen, head of UK offices at Cushman & Wakefield, said: “The strong take-up figures in 2023, particularly in the final quarter, reflect the ongoing attractiveness of London’s office market to occupiers. Despite economic challenges, leasing activity has held up well, especially for Grade A space. With active requirements at record levels but constraints on new supply, we expect competition amongst tenants for the highest quality space to intensify further in 2024.”
Heena Gadhavi, from the research and insight team at Cushman & Wakefield, added: “The outlook for the London office leasing market remains positive after significantly outperforming expectations in the final quarter. The pace of economic recovery will continue to heavily influence occupier and landlord strategies, and, as inflation falls, there may also be the welcome boost of opportunities being unlocked for investors across the market.”
