Welcome to your latest Central London office market watch, exploring insight from the City and West End office occupational markets
Across the City market
Although July saw a lower level of space acquired than the previous month, with 394,481 sq ft transacting across 31 deals, year-to-date leasing activity, at 3.3m sq ft, is up 7% on the same period last year and down 2% on the long-term average for this period. We saw more activity during the month in the City Fringe market, and overall take-up in this market area accounted for 62% of space acquired in July. This was driven by firms acquiring space in the best-in-class buildings, such as the JJ Mack Building, demonstrating the flight-to-quality trend we continue to see in the market. Overall, 67% of space acquired was in BREEAM-rated Excellent or Outstanding buildings.
Space under offer at the end of July stood at 2.9m sq ft and was up 35% on the previous month and up 69% from the end of 2023. As a result, in H2, we expect to see a continuation of the strong levels of leasing activity seen in H1.
At 8.8%, the vacancy rate is at its lowest level in over three years and down 20 bps on the previous month, although it remains above the long-term average for the City of 6.3%.
City Highlights
Across the West End market
After a subdued first half of the year, leasing activity picked up significantly in July, totalling 456,055 sq ft across 20 transactions, the highest monthly take-up since December 2023. This brought the total YTD to 1.71m sq ft, down 3% on last year and 26% on the 10-year average. Just under half of this month’s take-up can be attributed to BDO’s pre-let of floors 1 to 6 at The M Building, 334 Oxford Street, W1, in what was the largest transaction to complete in the West End since 2022. Also of note was the completion of floors 4 to 6 at 1 Rathbone Square to Monday.com via assignment from Meta. The transaction marks only the second acquisition of more than 50,000 sq ft of space by a Tech & Media sector occupier since the beginning of 2022, highlighting the muted level of demand we have seen from this sector in recent years.
The vacancy rate, in turn, fell 20 bps to 7.7% after hitting a 21-year peak at the end of June. Tenant-controlled space also saw a significant drop, after four consecutive months of increases, to 1.10m sq ft. Just under 40% of this space is located in the North of Oxford Street East submarket, and a third is being released by Tech & Media sector occupiers.
West End Highlights
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