Over the past few years we’ve witnessed a noticeable pattern of tenants moving from the West End to either the City core, its fringe or other more easterly locations. Limited space in the west, combined with lower rents in the east, attracted some to make the switch.

However, in 2015 we saw this trend begin to slow. While in 2014 tenants from the West End took 827,758 sq ft of space in the east, in 2015 they took under half this – only 395,529 sq ft. Where they chose to make their home also underwent a significant shift last year. Southbank was by far and away the most popular destination in 2014, with almost half a million square foot of space snapped up by West End tenants.

By 2015 it accounted for just over 40,000 sq ft – less than 10 per cent of its total for 2014. Instead, those West End occupiers who chose to relocate moved smaller distances, favouring Victoria and Midtown.

So why has the drift from west to east slowed? The main factor is that the gap between rents on average Grade A/B office accommodation in the east and west (excluding that in towers) has almost disappeared, and with it a major incentive to move larger distances. By the end of 2015 the average Grade A rent in the City was £54.75 per sq ft, while the average prime rent was £74.75 per sq ft. Compare this to 2014 when the same rents were £48.95 per sq ft and £62.50 per sq ft respectively.

However, its worth noting that London’s office market should really be analysed over a longer term, and this dip in west to east migration in the last 12 months might be exactly that: a dip.

Whichever way it is interpreted, a reduction in tenants moving from west to east doesn’t mean that new space delivered in the east won’t be taken. The City might be about to see four years of above-average completions (although 21 per cent of this space has been pre-let), but we’re forecasting that population and economic growth, combined with lease expiries and building obsolescence, could lead to 22 million sq ft of additional space being required in London over the next five years. Although there are some external factors that could cause the leasing market to slow, it’s unlikely that good quality space will lie empty for long.

Further information

Contact Savills Office & Business Space