London’s West End office market has been under a microscope for the past few years. Occupiers continue their search for the best new office schemes, looking for today’s new version of Grade A space in prime locations. But with low vacancy rates of that sought after stock, and the development viability challenges preventing re-positioning and refurbishment of older assets, the demand is rapidly outweighing supply. 

So where do the occupiers go who need space in the West End in locations that has good transport links, meets their organisations sustainability criteria, provides amenities that their employees expect, and has large enough floor plates to accommodate all their staff? The answer is that they can remain in the West End, but they accept that the area is undergoing change and expansion – resulting in the core area of Mayfair extending northwards to include Oxford Street. 

With around 1.1m sq ft of space due for completion on Oxford Street between now and 2026, and with the opening of the Elizabeth Line, this globally recognised retail pitch is rapidly evolving to be a credible office pitch in its own right. This year to date there have already been six pre-lets, out of 21 for the West End as a whole, totalling 86,616 sq ft in this area, compared to zero during the same period last year. Four of these pre-lets took place at 65 Davies Street, which is now fully pre-let. The other two took place in The Burlian at 80 New Bond Street, where the two remaining floors are both under offer.

As the expansion of the core West End market takes hold, one of the net beneficiaries are the former department stores which have fallen victim to the retail revolution. The former London flagship Debenhams store, as well as House of Fraser, are testament to this trend, as they are currently going through their respective transformations to produce major new retail and office schemes. Headline rents of up to £165 per sq ft are being talked about for Debenhams, which would have been unthinkable two years ago. This goes to show that occupiers who would previously overlook Oxford Street are wising up to the benefits of buildings offering larger floor plates, developed with everything else you would expect from a Grade A scheme.

The recent Marks & Spencer planning decision is one that has divided opinions, with the Secretary of State refusing planning permission despite Westminster City Council and the Greater London Authority’s approval to demolish its current building at 458 Oxford Street, and replace it with a new retail and office scheme. However, the very idea of the proposal is testament to how new offices in this location are seen as the new frontier in the core West End market.

It’ll be interesting to see what happens with Marks & Spencer, as well as where the Oxford Street regeneration goes in terms of attracting office occupiers from across central London and beyond. London's West End will always maintain its prestige and allure, and the emergence of the Oxford Street office sub-market is set well to be accepted by occupiers in search of prime office space.

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Contact Jonathan Gardiner

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