Take-up of central London office space thrives as under offer levels hit 18-year high

Sebastian McCarthy
Office space under offer in the capital has jumped to its highest levels in nearly two decades

Central London office space under offer has soared to an 18-year high, according to the latest figures from global real estate advisor CBRE.

Roughly 4.3m square feet (sq ft) of offices in the centre of the capital was under offer in the second quarter of this year, rising 39 per cent over the three months to levels not seen since the millennium.

Take-up of office space also rebounded strongly from a poor first quarter of 2018, increasing 21 per cent as landmark deals such as the Chinese embassy move to the Royal Mint Court on the edge of the City drove the growth.

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Dan Gaunt, a central London partner and head of city agency at Knight Frank, told City A.M.: "At boardroom level now it's so important that staff are key to the health and success of the business that they have to house them in the right quality of offices. Property has a louder voice in the boardroom than it ever has done before."

Gaunt added: "In times like 2008 and 2013 the world was pretty shaky, but in 2018 it is looking a bit better. We haven't seen the mass wholesale movement to people out to Europe as predicted and the market has enjoyed sustained strongish performance in the last 12 to 15 months."

Under offers remained significantly above the 10-year average of 2.9m sq ft for the sixth consecutive quarter, as properties such as 11-21 Canal Reach in King’s Cross went under offer for its 404,600 sq ft.

Growing demand for flexible office space has also driven the bounce back from a poor start to the year, with take-up of 698,000 sq ft across 21 deals, the largest deal to a flexible office provider in the second quarter of 2018 being the 131,500 sq ft letting to WeWork at Aviation House, Kingsway.

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Adam Cosgrove, director of London leasing at CBRE, said: "After a relatively slow first quarter, the London office leasing market has rebounded in a remarkable fashion as occupier appetite for London office space reaches record levels, with under offers at an 18 year record high."

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