Office leasing market in London remains robust, says CBRE
New leased office space was well above average across London, shows a recent analysis from CBRE. Central London booked more than 11% above its quarterly average for Q4 2017, with the City drawing 22% above its ten-year average. The number of large scale leases, in excess of 100,000 square feet, was the highest since 2001 across 2017.
Concerns around the impact of Brexit on the financial service sector in London ramped up throughout last year. At one point this even led the Bank of England to warn that as many as 75,000 jobs could leave London’s financial services sector after the completion of Britain’s severance from the EU. For now, however, the UK capital remains a global hub of activity.
Following a record first half of 2017, which saw Chinese investors pump cash into the London real estate scene, new analysis shows that interest in commercial real estate in London remains strong. Uptake has increased by 7% in 2017 from the previous year; in total around 13.2 million square feet of space was taken up through the year. The fourth quarter of 2017 saw a sharp 10% increase from the previous quarter, to 3.8 million square feet. The most recent average was well above the average for the past ten years of 3.1 million square foot per quarter.
The increase, according to property consultancy CBRE, reflects particular strength in demand from the professional services sector – while the financial service sector (banking in particular) also sought to add capacity, even with the uncertainty of Brexit.
Central London was particularly resilient in the final months of 2017, with take-up at 3.1 million square feet, around 11% higher than the ten-year average for the centre. The City, which houses much of London’s financial services industry, has seen offer levels hit 1.4 million square feet, or around 22% above the ten-year average.
The last quarter of the year saw a number of large deals – with seven in excess of 100,000 square feet – the largest such rise since 2010. Meanwhile, the year saw a total of 17 deals in excess of 100,000 square feet, representing the highest large deal total since 2001.
Commenting on the latest figures, Emma Crawford, Managing Director, London Leasing at CBRE, said, “Against a difficult backdrop in 2017, London once again gritted its teeth and showed its continued resilience. This is reflected in our office leasing figures which show a year on year increase of 7%. Whilst the serviced office sector accounted for a large proportion of leasing activity in Central London, as we finished the year the largest under offer of the quarter was in the banking sector, which despite initial fears is indicative of London maintaining its crown as Europe’s premier financial hub.”
Recent analysis from Deloitte, regarding commercial office space under construction, noted that, while Q3 2017 saw a drop of 7% of office space under construction, orders continue to be above that of 2016, and hit the highest volume in 13 years.
