Research

Q1 2020 Central London office market report

How the office market responds to the COVID-19 crisis remains to be seen. We have put today’s market into context based on previous recessions and provide an update on performance throughout Q1.

April 30, 2020

The impact on the office market will be influenced by the severity and length of any economic downturn, while the response from occupiers will depend upon the speed and shape of the recovery.

Across Central London there was just 1.7 million sq ft of take-up in Q1, the slowest start to the year since 2011. Volumes were down 22% on the Q1 10-year average (2.2 million sq ft) and were 25% below the same period in 2019. The downturn in leasing cannot be directly attributed to COVID-19, given that most of the quarter was functioning under normal circumstances.

Despite a strong start to the year, COVID-19 has disrupted the investment market, with a number of sales stalling over the last few weeks. Overall in Q1, investment volumes were subdued, totalling just £2.3 billion which was 19% below the Q1 10-year average. Nevertheless, Q1 volumes were in line with quarterly volumes recorded during most of 2019, when the first three quarters averaged circa £2.5 billion before the market saw a temporary resurgence in Q4. There were seven transactions in excess of £100 million in Q1, and these accounted for 60% of all volumes. The largest deal completed was L&G’s purchase of Sanctuary Buildings, 16-20 Great Smith Street, SW1 for £300 million.

Read more in our Q1 2020 Central London office market report.

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