The office leasing market took a beating last year as the Covid-19 pandemic and subsequent lockdowns brought about the work-from-home era and companies reassessed their office footprint.
However, green shoots in the central London office rental market are starting to appear.
Data from DeVonoCresa found central London office leasing had increased 27 per cent in the first quarter of 2021, compared to the quarter prior.
However, with hundreds of thousands of Londoners still working from home consistently, total office leasing activity is still well below levels seen pre-pandemic.
Total office leasing activity in 2019 totalled more than 19m sq ft in central London. In 2020 only 6m sq ft changed hands.
DeVonoCresa data showed the biggest increase in quarter-on-quarter
Separate data from office leasing giant CBRE this month confirmed the upward trend with 25 deals across central London have been transacted at a rental level of or above £90 per sq ft in the last six months, representing one fifth of all deals.
In comparison, in the six months before the pandemic, just six per cent of the market was transacting at more than £90 sq ft.
However, even with a surge in leasing enquiries companies looking to move office can still get deals, with average rents six per cent lower than a year ago and incentives such a rent-free months still common.
DeVonoCresa’s market snapshot for the first quarter said this time last year on a typical 10-year
lease, the rent-free periods ranged from 18-24 months, location dependant. At the start of 2021
the range of rent-free periods offered to tenants had moved out to 25-31 months.
Average net effective rents for Grade A office property in the first quarter of 2021across London remain lower than a year ago too, at £50 per sq ft, compared to £55 per sq ft a year ago.
They remain highest in Mayfair/St James’s (north of £110 per sq ft), Soho and Knightsbridge in the West End.
In the City and fringe areas the highest rents are found in Clerkenwell (£77.50 per sq ft), Farringdon, Old St and the core of the Square Mile.
Traditional workplace areas also rebounded from the pandemic best, with stronger leasing activity in the City, Midtown and the West End keeping availability level growth to single digits, while places such as Canary Wharf and Southbank saw availability levels grow as new office spaces coming to market combined with overall lower leavels of leases agreed, aaccording to DeVonoCresa.