LONDON IN POST-BREXIT OFFICE SPACE BOOST
23rd August 2016
Global real estate consultancy CBRE is reporting a month-on-month spike in demand for office space in London following the Brexit referendum in late June.
After what it calls a “a pre-referendum dip”, take-up of London office space increased by 24 per cent in July compared with June with a total 980,400 square feet leased – representing the strongest monthly average take-up since March.
Office take-up in central London remained below its 10-year average of 1.1m sq ft a month, but CBRE believes above-trend leasing activity in the City and Southbank suggests that businesses still see the capital as an attractive place to locate.
Available office space increased by 2 per cent over the month to stand at 13.6 million sq ft, but remained 7 per cent below the 10-year average, as secondhand, completed and pipeline space continues to enter the market. The development pipeline is strong, but much is pre-let, with 46 per cent of the 5.1 million sq ft of space expected to complete before the end of the year already pre-committed to occupiers.
Office space under offer fell by 14 per cent over the course of the month to stand at 3 million sq ft as a number of large deals completed. But this remains 7 per cent above the 10-year average of 2.8 million sq ft – another indicator of strong demand.
CBRE cites the deal by Wells Fargo to lease 220,700 sq ft of space in the City of London as a vote of confidence from the banking and finance sector after the Leave vote in the EU referendum. The banking and finance sector accounted for 31 per cent of take-up in July, followed by the business services sector (22 per cent) and creative industries (17 per cent).
“Much has been said about the health of the London office market this year, but clearly demand for office space remains buoyant,” said CBRE’s head of central London leasing, Emma Crawford.
“Businesses are still confident about London’s significant advantages as a global business centre, even when the UK is outside the EU. This continued demand, mostly driven by key lease events, in a market with low supply, is maintaining headline rents at the same rate as in May and June.
“Of course the jump in leasing activity is good news for the market, and whilst this is not universal across all sub-sectors of the London market, even with heightened economic and political uncertainty, longer-term prospects remain promising.”
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