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Central London office demand back on track

Tuesday, April 26, 2022 6:31 a.m.

The London office market looks healthier and healthier than ever, according to the UK’s two largest property companies, despite the lures of working from home.

Office lease take-up in central London rose 89% year-on-year in the first quarter, CBRE data shared exclusively with AM City revealed.

Businesses in the city to bet on returning office space include the law firm Hogan Lovells, which pre-leased the largest space of the period, with 280,000 square feet at 21 Holborn Viaduct, EC1.

There has been a particular increase in small transactions typically seen before Covid, said Rob Madden, head of CBRE’s London office brokerage.

A total of 1.7 million square feet of deals under 20,000 square feet were signed across 351 individual transactions. That was just over a third higher than transactions in any other quarter since Covid hit.

The office space offered in the heart of the capital totals 3.9 m², above a ten-year average of 3.3 m².

Meanwhile, Savills, headquartered in London, reported demand for office space surpassing a five-year high.

Nearly a third of office occupiers are increasing the amount of space they seek, according to data from Savills, as companies seek to increase their workforces and operations post-pandemic.

The majority (41%) of central London occupiers are looking to double the area they currently occupy, around 10,000 square feet.

“We continue to see an increase in incoming migrants to London’s booming new office districts,” said Jon Gardiner, head of central London office leasing at Savills, citing Swiss pharmaceutical giant Novartis moving to new offices in White City from the Thames Valley in 2020, and Microsoft looking for 500,000 square feet in its Reading headquarters move.

“These companies see London as a key tool in the war for talent,” Gardiner explained. “They’re looking for amenity-rich, well-connected city campuses.”

With the battle for top talent showing no signs of abating, Victoria Bajela, London commercial property analyst at Savills, suggested the spiraling cost of living crisis could see occupiers opt for larger spaces. smaller but better – although this is a trend that has yet to appear.