The UK's leading occupier-only commercial real estate consultancy firm, DeVono Cresa, launches its latest review of the London office market.
LONDON, Sept. 19, 2018 /PRNewswire/ -- Shaun Dawson, Head of Insights for DeVono Cresa highlights "The demand for office space across central London has remained resilient, flying in the face of the unsettling political and economic headwinds both at home and abroad." Leasing activity for H1 2018 shows that a resurgence in tenant demand in Q2 took the half-year letting volume to 6.3 million sq ft – comfortably above the 5.1 million sq ft H1 long-term average.
International leasing commitment to central London continued, highlighted not least by the Chinese Embassy deal for 589,000 sq ft at the Royal Mint Court scheme. Other notable deals include Japan's Sumitomi Mitsui Banking Corporation's letting at 100 Liverpool Street and our very own client The Trade Desk pre-letting 55,000 sq ft at Helical's 1 Bartholomew Close scheme. These deals also highlight a tenants growing propensity towards Grade A space, of which 46% of the H1 2018 total leasing activity accounted for.
Dawson states, "Rents remain favourable for tenants." Prime rents across all central London submarkets have seen muted growth of just 3% over the past 12 months. While the majority of submarkets have seen no change, we have seen some upward shift in fringe locations such as Hackney/London Fields (+4%) to £40.00 per sq ft. We have also recorded some increases in the more core locations such as Canary Wharf (now at £47.50 per sq ft) and Paddington (now at a historic high of £70.00 per sq ft). On the flip-side some core locations have taken a dip over the quarter: Covent Garden, Knightsbridge and Victoria have dipped by an average of 3%.
In addition, the Brexit rollercoaster ride is about to pick up pace as we head towards the October (or maybe November) negotiation deadline. Whilst the mass exodus of businesses has not materialised, the uncertainty and lack of information coming from the UK and EU is causing consternation for firms trying to plan for their future space needs. The coming months should provide more clarity but where will the ride end? What we can say for certain is that Brexit has become a facilitator of change in the market – bringing flexibility to the fore for clients and landlords alike.
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Contact: Shaun Dawson, Head of Insights, email@example.com, +44(0)207-096-9911