Demand for workplace house in central London took off in the direction of the tip of summer season, pouring chilly water on the concept many employees may by no means return into town.
Between July and September, firms leased 2.77 million sq ft of workplace house in central London, in line with information from Cushman & Wakefield, the property agent. That was 54 per cent greater than was rented out between April and June and practically thrice what was taken up within the third quarter of final yr. It’s also 12 per cent above the five-year quarterly common.
Cushman’s analysts mentioned that the third quarter had “marked a turning level within the post-pandemic London workplace market”.
Media and know-how firms have been driving demand, accounting for about 31 per cent of leasing volumes in the course of the quarter. Banks and regulation companies had been additionally energetic.
By the tip of September, there was 3.4 million sq ft of workplace house beneath provide, in line with Cushman, 18 per cent greater than the five-year quarterly common of two.9 million sq ft beneath provide.
“We’ve seen sentiment enhance drastically within the London workplace market within the third quarter,” Ben Cullen, head of UK workplaces at Cushman & Wakefield, mentioned. “This largely displays the opening up of the financial system, but in addition the discharge of necessities that had been paused in the course of the lockdowns of the final 18 months. Crucially, it exhibits that companies are making long-term investments of their bodily workplace house.”
The controversy about the way forward for the workplace has rumbled on for over a yr and a definitive reply has but to emerge. Nonetheless, because the return to the workplace accelerates, the analysts anticipate tenants will “lastly be capable of observe and higher perceive their house necessities”.
Over the previous 12 months, central London workplace rents have fallen by 1.1 per cent, however they’re forecast to rise by round 5.3 per cent in 2022.
The variety of London workplace blocks being purchased and bought can be enhancing, albeit from a low base, with abroad buyers, who sometimes account for an enormous chunk of buying and selling exercise, having been unable to journey into Britain till not too long ago.
A complete of £3.2 billion was invested in central London workplaces within the third quarter, bringing the year-to-date determine as much as £7.5 billion — 21.5 per cent shy of the five-year common. The continued easing of journey restrictions all over the world would “undoubtedly have a optimistic influence” on funding exercise, Cushman mentioned.