We haven't seen as many office pre-lets being agreed in London in the last 10 years as we have in 2018.

Savills research shows that 20 deals have been agreed already in the year-to-date (YTD), which includes pre-lets (a letting secured before development commences) and pre-completion lets (a letting occurring during the construction phase), both in excess of 50,000 sq ft. This places 2018 ahead of 2016, the next best year in the last decade with 19 pre-lets, with the final quarter still to go and at least eight further pre-lets under offer.

Relative to square footage, 2018 has seen 2.96 million sq ft of pre-lets, ahead of the record-breaking 2.74 million sq ft of pre-lets agreed in 2013. The activity is a clear sign that businesses continue to make long-term commitments to London.

We’re seeing a far greater spread of occupier commit to pre-lets than ever before. One reason for this is the changing face of the City as it draws occupiers from across London. Tech and media firms are among those making very significant long-term commitments to new buildings, alongside traditional City occupiers, including those in the insurance and financial sectors.

Historically the traditional West End occupier rarely had a dedicated in-house property team and therefore business decision-makers were the ones leading office searches, many of whom struggled to visualise development opportunities and therefore chose not to commit to a pre-let. The spike in activity in 2018 is a direct result of global brands moving in, with the likes of real estate-savvy Facebook and Sony both committing to new European headquarters in the West End and King’s Cross this year.

Occupiers are being driven by upcoming lease events, continued limited new developments coming on the market and, clearly, a long-term belief in London. At the same time, developers are delivering some first class buildings that occupiers and their staff want to work in. In turn, this high level of pre-letting further reduces the supply of available office space on the market in the forthcoming years.

Further information

Read more: City Office Market Watch