Surge in demand for London office space

May 2019 saw a total of 13.3m sq ft of London office space under construction across 98 developments. 60 percent of this space has already been let or is under offer, the highest level to be achieved in over 15 years. This is according to new data from real estate advisor CBRE. Take-up of office space rose above the 10-year average in May 2019, increasing to 1.2m sq ft. There were eighty transactions, of which twelve were greater than 20,000 sq ft in size. The largest deal of the month saw the European Bank for Reconstruction & Development take 358,700 sq ft at Five Bank Street (pictured).

In total 663,700 sq ft (56 percent) of the take-up in May was pre-let, significantly above the 10-year average for pre-letting of 206,800 sq ft (+221 percent). The banking and finance sector accounted for over half of the month’s space-takes, acquiring 588,500 sq ft during May. The business services sector represented 16 percent of take-up, with a significant share (130,500 sq ft) taken by flexible office operators including Regus and Fora.

In another welcome sign, under offers increased during the month to 3.9m sq ft, remaining well above the 10-year average of 3.0m sq ft (+28 percent). Whilst availability continues to tighten with a slight decline by 1 percent to 13.3m sq ft during May. As a result, availability remains below the 10-year average of 14.6m sq ft.

David Perowne, Executive Director, London Leasing CBRE said: “It is a sign of London’s resilience that even in times of heightened political uncertainty, the demand for quality office space shows no signs of abating. May 2019 has set a new record in terms of space currently under development being acquired by occupiers looking to secure premium space in the capital.”