Contents

• Across the City market

• Across the West End market

Across the City market

City take-up in December reached 1.11m sq ft across 50 transactions. This was up 9% on December 2023 and contributed to a 2024 take-up of 6.54m sq ft across 432 transactions. This was down 1% on 2023, up 20% on the five-year average, and up 2% on the long-term average. The Insurance & Financial sector was the main driver of leasing activity in 2024 and accounted for 37% of space acquired (by sq ft) and 27% by number of transactions. The 2.4m sq ft of take-up in this sector is the highest recorded for any year. This was boosted by the largest deal of the year; financial services firm Citadel’s pre-let of the 2 Finsbury Avenue development, EC2 (250,000 sq ft).

The next largest sector was the Tech & Media sector with a 17% share of take-up, a positive sign after a fall in demand from this sector in 2023 saw them make up only 12% of take-up. This can be put down to both a return to the office and increased growth after the challenges the Tech sector faced over the past couple of years. Take-up to this sector was driven by the Amazon lettings earlier this year at The Bard (106,792 sq ft) and The Hewett, (72,132 sq ft) 8 Curtain Road, EC2.

The vacancy rate at the end of December hit 7.9% down 160 bps from the end of 2023 and the lowest level since Q4 2020. This was buoyed by the high level of take-up in Q4, along with a lower level of expected completions in the second quarter of 2025.

There has continued to be a flight to quality in the market, which can be seen by the 64% of take-up this year that has occurred in BREEAM ‘Excellent’ or ‘Outstanding’ rated buildings; this, along with limited supply in the best-in-class buildings has led to a 7.5% increase in the annual average prime rents to £98.60 per sq ft. Further evidence of this can be seen when looking at prime buildings such as 22 Bishopsgate (an EPC A, BREEAM ‘Excellent’ and NABERS five-star-rated tower), which is now fully let and achieved record rents for the city office market. In 2024, we saw new record rents being achieved in each of the city’s submarkets (Midtown, Southbank, Eastern Fringe, Northern Fringe, and City Core), proving that tenants are happy to look further afield to secure best-in-class space with a rich access to amenities.

City Highlights

Across the West End market

Take-up in the final month of 2024 totalled 368,807 sq ft across 33 transactions, bringing the quarterly figure to 1.07m sq ft, down 6% on the ten-year average. The total for 2024 stands at 3.6m sq ft, down 16% on the ten-year average, albeit only 4% below the five-year average.  The largest transaction of the quarter saw the freehold sale of  11–12 St James’s Square, SW1, to the Ellison Institute of Technology for its own occupation for £162m. It is unsurprising that the largest acquisition of the space in the core this year was an owner-occupier deal, given the tight levels of supply available to lease.

While the overall West End vacancy rate stands at 7.0%, the rate in Mayfair/St James’s stands at just 3.4%, with the availability of prime space and larger floorplates even scarcer. Consequently, this has had a knock-on effect on other data points. The core only accounted for 15% of take-up in 2024, compared to 28% in 2023, and while the Financial Services sector (which has historically focused on space in this market) continues to drive demand, it is not at the same level as it has in recent years, having accounted for 23% of take-up in 2024, compared to 40% and 39% in 2022 and 2023, respectively.

This lower level of activity in the core has led to a 2% year-on-year fall in the average prime rent to £157.15 per sq ft. However, the non-core average prime rent has risen 3.5% to £116.86 per sq ft. Furthermore, we have witnessed record rents achieved in several other markets, including Covent Garden, Victoria/Westminster, Chelsea, and Battersea, suggesting that demand for best-in-class space remains robust. Furthermore, half of the £100+ rents achieved this year were outside the core, up from just 3% in 2020.

There is little evidence that the constrained levels of supply in the core show any signs of abating in the year ahead. The development pipeline currently forecasts 4.19m sq ft of completions in 2025, 23% of which has been pre-let, a figure which rises to 73% for the core. Looking at the wider pipeline over the next few years, 12.1m sq ft is anticipated to be delivered between 2025 and 2028, of which 18% has been pre-let.

West End Highlights

EXPLORE MORE INSIGHT >

Central London Office Market Watch – Q4 2024

< Read more >

If you have any questions, please do not hesitate to get in touch via the Authors panel

_{Back to top of page}