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Capital's demand for office space bounces back in Q3

20 October 2016 | Herpreet Kaur Grewal

Take-up of London office space rebounded in the third quarter of 2016 after a weak second quarter, according to the latest market report from global real estate adviser CBRE. 

 

During the second quarter of 2016 heightened uncertainty, partly because of the pending referendum, take-up for London office space fell 22 per cent quarter-on-quarter to 2.4 million square feet. 

 

In contrast, the third quarter of the year saw a quarterly increase of 21 per cent, with a total of 2.9 million sq ft of office space acquired. Lettings were therefore close to the 10-year average of 3.1 million sq ft.

 

Take-up in the quarter was driven by two major deals, notably the letting of 467,300 sq ft at Battersea Power Station, and a 220,700 sq ft owner-occupier acquisition at 33 Central, King William Street. The deal at Battersea Power Station meant that the creative sector represented the largest proportion of take-up in the quarter; constituting 33 per cent of the total.

 

An increase in take-up coincided with an increase in availability for the sixth consecutive quarter, driven principally by 534,000 sq ft of additional secondhand space. Consequently, availability rose by 3 per cent to stand at 13.7 million sq ft, yet remains 6 per cent behind the 10-year average of 14.5 million sq ft.

 

The amount of space under offer in Central London fell by 23 per cent over the course of the third quarter to three million sq ft following the signing of these large transactions. 

 

But the amount of space under offer remains above the 10-year average of 2.8 million sq ft and active demand in London remains high. At the end of Q3 2016, there were 14 requirements for space of more than 100,000 sq ft.

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