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London office leasing continued to increase in Q3

Take-up of central London office space increased in the third quarter of this year as the market in the heart of the capital continued its steady recovery, according to a new report. 

Market activity came to a virtual halt in the immediate aftermath of the Brexit vote, but fresh figures for Q3 compiled by Cushman & Wakefield show that September saw a real resurgence in new occupiers committing to space which boosted the total occupational office space under offer.

Total occupancy in September reached 2.4m sq ft, which was almost identical to the figure for the referendum month of June and 41% up from July’s low of 1.7m sq ft. This contributed to a total of 6.7m sq ft for the first three quarters of 2016.

 The projected take up total for 2016 is 8.5m sq ft up on 2011 and 2012, however down on 2013, 2014 and 2015.

Andy Tyler, head of West End Office at Cushman & Wakefield, said: “The leasing market slowed down sharply immediately post-Brexit but, as the latest data reveals, confidence is returning – albeit at a rather muted level.

“We are seeing new enquiries coming in and occupiers are not afraid to commit. Two very large deals concluded by Cushman & Wakefield during the quarter – in the emerging West End rather than central London – provide the evidence for this.

“Year-end figures are likely to exceed 2011 and 2012 when London was still suffering the effects of the Global Financial Crisis but confidence was returning. It is also worth noting the recent Business Rates increases could temper the competitive advantage which some locations have hitherto enjoyed and might play more to the West End and western fringe in future.

 “Crucially, of course, what London seeks is clarity around what Brexit will look like and its impact. Only then will it be possible to fully assess the implications for the London office market. In this respect, 2017 could be a pivotal year.”

Central London lettings volumes 2005 – 2016

London office leasing continued to increase in Q3

Alistair Brown, head of City Office at Cushman & Wakefield, said: “The level of under offer space at the end of September has shown London’s occupiers are ready to move forward. They realise Brexit will not be a quick process and life in London goes on.

“Specifically, the City saw a 16% increase in office space going under offer during September, building on the momentum created over the summer by occupiers such as Wells Fargo who committed to 230,000 sq ft at 33 Central.”

Largest Central London deals completed in Q3 2016

Market

District

Building Name

Location

Postcode

Unit Size SQ FT

 

Emerging West End

Battersea and Nine Elms

 

Battersea Power Station

SW8

475,000

(+25,000 ancillary)

 

City

City Core

33 Central

33 King William Street

EC4

227,689

 

Emerging West End

White City

 

White City Place

W12

71,000

 

West End

Victoria

Verde

Bressenden Place

SW1

58,620

 

City

Midtown

Aldwych House

81 Aldwych

WC2

56,000

 

City

Aldgate and Whitechapel

The White Chapel Building

10 Whitechapel High Street

E1

54,799

 

East London

Stratford

Here East (Press Centre)

Waterden Road

E15

51,894

 
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