Welcome to the London Office Space Commercial Property Guides where you will find detailed stats, trends and market analysis of the commercial property and office market in London. Use the links on the left to access the guides or view snippets below.
London's Office Rental Market - Trends for 2021
The London office market faced challenging conditions during 2020. Some of the challenges were a continuation of trends that had been unfolding for years, such as Brexit-related uncertainty and the strong growth of new office accommodation models, including co-working and hybrid spaces. However, the predominant theme in the city's office rental market throughout 2020 was the effect of the COVID-19 pandemic on real estate.
The sudden need for remote work had a severe impact on take-up rates and forced many businesses to contemplate a new real estate strategy which, in many cases, involved dropping assets or not renewing leases. At the end of 2020, take-up rates sat at nearly 50% below trend. Low take-up rates have a direct or indirect bearing on the office market forecasts, which we will now examine in detail. Read More...
London's Office Rental Market - Trends for 2020
The London office market ended 2019 on a positive note, pointing towards stability and recovery after months of uncertainty brought about the political situation. By December 2019, activity levels were high, with 12 million square feet under construction and unusually high pre-letting activity (1).
Market analysts initially expected the positive trend to continue into 2020 (2). Their original forecast contemplated a surge in construction, sustained rental growth, a stable leasing volume, and a drop in vacancy rates. Other themes set to dominate the market included: Read More...
London's Office Rental Market - Trends for 2019
London's office rental market ended 2018 on a strong note. Towards the end of the year, the city's market evidenced record-high take up levels (which in fact were the highest since 2010), as well as low availability rates across the board, which signalled strong demand and a high level of transactions.
Moving into 2019, the overall outlook appears to be mixed: while a generalised decline in rental values is evident and this trend is even more marked in mid-range offices, availability rates are low and expected to reach record-low levels in some areas. Read More...
London's Office Rental Market - Trends for 2017
According to recent research data, 2017 is expected to be a good year for the London office rental market, despite the much-disputed effects of the EU referendum and other political developments in Europe and the US. The key main trends to note involve a diversification of the occupier profile, increased demand for flexible terms, and a potentially high number of relocations within the city following the implementation of new business rates.
In 2017, London is expected to witness a widening in the number of alternatives to traditional office space, such as co-working spaces. Flexibility is also evident in lease terms, which may become shorter and include tenant-only break clauses. Certain business sectors are expected to become major players in the occupier market this year.
London's Office Rental Market - Trends for 2016
During 2016, vacancy rates have remained at around 4 per cent across all sub-markets with the exception of St James, Clerkenwell, and Holborn. Take up volume was at its highest in the City, with 43 per cent of the total, followed by the West End and the Docklands.
Towards the end of Q3, the highest per-square-foot rates were in Mayfair, St James, Knightsbridge, and Marylebone, averaging £125 / sq ft across the West End. The second highest rates were in the City, ranging between £60 and £93 / sq ft depending on whether space is new, refitted or in upper floors. At the lower end of the scale, we find properties in the Docklands, Chiswick, Aldgate, and Shoreditch, where asking rents range from £33 to £53 / sq ft for new or refitted office space.
London's Office Rental Market - Trends for 2015
Year 2014 has come to an end with excellent news for the London commercial property market. During the past twelve months, this property market sector has experienced a consolidation of several upward trends that have particularly benefited the office sub-sector. Continuous rental growth, declining vacancy rates, and stable investment yields are some of the trends that have characterised the office market across most London areas over the past year.
London's Office Rental Market - Trends for 2014
The majority of investors in office properties in London city are from non-domestic purchasers (70% of investors in the past four years compared to 45% in the early 2000s, according to Savills). In fact, 2013 saw 91% of its investments in the office markets (including those purchases which were over £100 million) from foreign investors, while only 22% of investors were UK based. However, a third of those investments which were in the range of £100 million were from UK investors. Deloitte Real Estate predicts that while these overseas buyers will remain important investors, many private equity investors will view the growing market favourably, and invest in new opportunities, many of which may have increased leasing risk: for example, offices in business parks and in key regional centres. Many of these new purchases may be outside London City, and therefore Deloitte forecast that in many regional sectors may outstrip London City in terms of market performance for some part of 2014.
Along with office rental take-up rising to its highest level in London City since 2010 (rising by 45%, according to Savills), vacancy rates of office space fell to a low of 6% in 2013. Predictions for 2014 forecast that while take-up may be slightly reduced compared to last year, vacancy rate should remain stable and average rental prices should increase by 3-6% over the next 5 years. Investor rates are believed to remain stable also throughout 2014, while prime yields are predicted to increase by 25 bps by the end of 2014.
London's Office Rental Market - Trends for 2013
Forecasts for office rental trends in London over the coming year are mostly positive, with an expected increase of 3% in rental growth predicted by Savills. Of course, as London office rentals are subject to corporate demand, and as such are at risk of dropping investment value and rental rates if further city job losses occur. The decrease in job prospects in London's financial service sector played a huge role in the slow decrease of rental market figures last year. 2013 is showing 24% fewer job vacancies available in London's financial sector compared to December 2012, giving hope that 2013 will provide a more stable market.
To date, foreign investment in Central London makes up 74% of the year's investment, and this is thought to continue. 2012 saw £9.6 billion invested by foreign entities in London rental properties, a record-breaking value. Andy Rothery, head of Deloitte Real Estate, believes that upwards of £20 billion will come into the UK from overseas during 2013. Foreign demand for London offices and commercial property is in no way a new phenomenon: from the mid-1990s, a quarter of the city was owned by overseas companies. It is therefore believed that 2013 will be no different, with London's commercial properties expected to be in demand in all ranges of the price spectrum.
London Commercial Property Development - Trends for 2013
As in past years, the level of foreign investment in London's commercial property continues to skyrocket. This is hardly a new trend, with London's prime property having beaten both New York and Paris in prices every year since 2009. London Central Portfolio, property managers who have delved into this matter, say that this is not like any housing bubble, which may burst at any moment, but has remained a stable place to invest. Increased competition in the purchase of office buildings in London's West End is predicted to give rise to higher rental prices as the area regains its claim of being the most expensive of all the office markets across the globe. As well as the obvious benefits this brings to office rentals, reclaiming this title makes London a 'must-have' spot for retailers, hotels and other industries.
However, despite the increased confidence and growth in certain property-driven sectors, it is thought by some of the experts in the field that rental prices will increase by little compared to 2012: Knight Frank Research predicts an annual growth of 1%, while Savills believes 0 - 1% will be the maximum.
2012 Trends for Central London's Commercial Property Rentals Market
Central London remains, after 2012, a stable market for commercial property rental, despite the poor economic situation. However, the question remains as to whether this continue to be so as foreign investors - the most active buyers of commercial property in the UK, dominating the market by a massive 65% - look to more attractively priced estates in other countries.
The investment total brought into London during the second quarter of the year equalled roughly £4.4 billion, which is 56% of the quarterly total, and most of this was spent on commercial offices. London offices remain one of the most sought-after property types - more was spent on offices, usually by foreign investors looking for a base in Central London, than was spent on both retail and industrial property combined. There was an increase of 8% on office spending during this secondary quarter of the year.
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