Described as vertical cities, office towers can offer countless pull factors for businesses, but simplified these can be grouped into sustainability, staff and status. Towers are usually compared to the best in class in terms of amenity provision and environmental credentials. This is certainly the case in the City of London where 95 per cent of office tower take-up since the start of 2021 has been space boasting a BREEAM rating of ‘Excellent’ or higher.

London’s towers are extremely attractive to occupiers. Take-up in towers in 2021 exceeded 850,000 sq ft for only the third time ever, accounting for 17 per cent of total annual take-up, the highest percentage on record. The attractions of tower space continued into the first quarter of this year: since the start of 2021 take-up has surpassed 1 million sq ft, reaching approximately 1.4 million sq ft.

This figure can be partially attributed to the flurry of deals occurring in 22 Bishopsgate, EC3, where in excess of 400,000 sq ft was acquired in 2021, including the likes of Apple, Skadden, RSA, William Blair, Tata Consulting and McDermott Will Emery. Apple of whom already occupy five floors are currently under offer on an additional five.

London’s tower market, just as the rest of the city’s prime office market, is proving to be remarkably resilient to the tumultuous and ever-changing regulations and restrictions experienced throughout Brexit, and Covid-19.

As occupiers are increasingly demanding best in class office space to suit new ways of working post pandemic and the environmental and social aspect of ESG, towers have been highly sought after. By way of an example, 40 Leadenhall, EC3 offers 17 outdoor spaces across upper floors, 90,000 sq ft of amenities including fitness, beauty and retail in a single 35 floor structure.

Tower space has always been synonymous with certain industries, demonstrated by the insurance and financial services sector accounting for a third of all tower take-up from the start of 2021 (until present), with the professional sector following closely behind reflecting 30 per cent. This includes the significant pre-let Brookfield secured when Latham & Watkins acquired approximately 200,000 sq ft at 1 Leadenhall, while Holman Fenwick Willan has pre-let  6-8 Bishopsgate, EC2.

However, the allure of towers appear to have a far reaching impact. 44 per cent of deals since the start of 2021 have involved first-time tower occupiers, with 11 per cent of tenants migrating from the West End, portraying the ever-growing geographical ambivalence of occupiers. A contributory factor in pushing traditionally West End occupiers to the city are the competitive rents, while simultaneously addressing environmental and social concerns, supported further by the ever-improving amenities provided both within the buildings and locally.

Looking at the future supply of towers, there are four schemes scheduled for completion in the City Core sub-market between now and the end of 2025, totalling 2.3 million sq ft. Most interestingly, 48 per cent of this have already been pre-let. Moreover, due to supply chain issues and growing construction costs affecting the viability and certainty of schemes, coupled with the growing bias for best in class we anticipate much more of this space to be pre-let nearing practical completion; at present there is approximately 450,000 sq ft under offer.

Further information

Contact Will Wilson

London's legal sector swoops in on 1 million sq ft of new offices