Reflecting the wider resilience of London’s West End office market in 2022, the submarket of Paddington saw 445,192 sq ft of new office lettings last year, 134 per cent above the 10-year long-term average.
Take-up activity includes a major pre-let at Paddington Square (220,000 sq ft) to Capital International, the asset management group, taking the building to fully let, as the area continues to draw a mix of occupier sectors.
Relocating from Victoria, Capital International follows a number of other occupiers which have been increasingly footloose in their office requirements and entering the Paddington market from elsewhere in London over the last five years. Included in this are Sony Pictures from Soho, Hellman & Freidman from Westminster and Premier League from Marylebone.
Other occupiers which committed to the submarket in 2022 include international packaging company DS Smith, Vertex Pharmaceuticals, Cerner and - most recently - Bark.com, which moved to the now fully let 10, 20 & 30 Eastbourne Terrace. Activity reflects a record level of demand from financial sector occupiers in 2022 accounting for 36 per cent of take-up, 185 per cent up on the annual volume seen over the past ten years.
Following the completion of Paddington Square, between 2023-2026 there will only be 540,000 sq ft of speculative space due to complete in the area, spread across two separate schemes.
Continued strong demand for best-in-class space has translated into rental resilience across the market, amid the current macroeconomic headwinds. Yet despite continued upward movement in rents in 2022, with 50 Eastbourne Terrace securing the highest rent on record for Paddington at £97.50 per sq ft and average Grade A rents of £76.50 per sq ft, the submarket continues to offer significant rental value and low overall occupational costs when compared to the broader West End market where average prime rents currently stand at £121.96 per sq ft. Consequently, Paddington is expected to see rental growth of up to 3.4 per cent per annum over the next four years, making it one of the most compelling submarkets for rental growth in London.
Paddington also offers occupiers large floor plates (15,000 sq ft +) traditionally limited in the West End and the benefits of strong connectivity, boosted further by the opening of the Elizabeth Line in 2022, making it the only West End submarket to offer both mainline and Elizabeth Line links. The latter makes Central London’s Bond Street accessible in only three minutes, the City (Liverpool Street Station) in 11 mins and Canary Wharf in 18 minutes.
In tandem with inward investment and new office development, the public realm and food and beverage offering has evolved considerably in Paddington over recent years, including a floating dining and retail market on canalside barges and the new Paddington Square retail arcade, soon to open. All of these elevate the submarket as an office location. Meanwhile, the Elizabeth Line entrance on Eastbourne Terrace, a Paddington Central new entrance and public realm at Bishops Bridge Road, vast ongoing improvements to Praed Street, and a new Bakerloo entrance beneath Paddington Square continue to enhance access to major office schemes in the area.
As Londoners continue to enjoy the new connectivity the Elizabeth Line creates, we expect Paddington to draw ever more occupiers looking for prime office space that is well designed, well located with strong amenities close by.
Further information
Stellar Soho: why the Central London office submarket continues to outperform
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