Over the past three years, the education sector has undergone a period of exponential growth in the greater London office market, recording annual take-up of over 200,000 sq. ft between 2019 and 2022. End of year take-up in 2022 represented an 85 per cent increase on the five-year average for the sector, making it one of the fastest growing office occupier groups in the region. The expansion has continued in 2023 with two deals at Here East, Stratford. Teeside University leased 27,000 sq ft and LMA has expanded its footprint by an additional 70,000 sq ft. Furthermore, Fairfield School of Business leased 11,000 sq ft at Mosaic East, Stephenson House, Croydon.

Demand originates not only from universities currently based in London but also regional and international institutions seeking new satellite campuses to capture the significant international and post-graduate student market. The recent 112,000 sq ft pre-let to Sheffield Hallam University at Related Argent’s Brent Cross Town development exemplifies the growth of the higher education sector across the region. So what makes greater London so attractive for the education sector?

Ultimately, it comes down to the student population. London has the highest quantum of students in any market in the UK, and it continues to grow. In the last five years enrolments in London grew by 15 per cent. Not only does this expansion ensure a flow of new talent into the economy, but it is also a welcome opportunity for landlords to benefit from the sector’s growth in a number of ways:

• Community building – educational establishments can serve to revitalise multi-use developments, offering a ready-made population to further attract food and beverage providers and residential development to the schemes and wider area
• Size - at 30,000 sq ft the average deal size is larger than average office lettings by 43 per cent. There have been ten education acquisitions across greater London in excess of 30,000 sq. ft since the start of 2020 including Global Banking School, Anglia Ruskin University, University of Wales Trinity Saint David, London South Bank University and University of West London
• Rents - educational tenants typically have good funding and take well-connected, Grade A office space paying market rents
• Term - the average lease length in the education sector is 11 years compared to traditional office leases at eight years

The expansion of the education sector also bodes well for future occupier demand from the private sector, notably from occupiers who want to locate near a university with a clear specialism, enticing companies by providing a talent pool from which to recruit. One example is Staffordshire University opening a campus at Here East, Stratford, specialising in gaming design courses and sitting alongside neighbouring tenants such as Sports Interactive.

However, landlords need to bear in mind other factors when considering education occupiers. For example, the high number of daily visitors may be management intensive and in most cases a dedicated / private entrance may be preferred. A change of planning use to F1 may also be required, which comprises schools, museums, galleries, libraries, halls, places of worship, church halls, law courts, non-residential education and training centres.  

Further information

Contact Simon Preece or Holly Purvis

Greater London & South East Offices – Outlook 2023