Q1 2023 Central London Office
Market Report

The latest update on the performance of the Central London office market in Q1 of 2023.

April 28, 2023
  • Julian Sandbach
  • Rob Corbett
  • Chris Valentine
  • Jeremy Attfield
  • John Woodger
  • Elaine Rossall
  • Hayley Armstrong

Central London take-up reached 2.1 million sq ft in Q1 which was 20% lower than the amount transacted in the corresponding period in 2022 (2.6 million sq ft) but only 2.5% down quarter on quarter. Total volumes over the first three months of the year were 9% lower than the 10-year Q1 average of 2.3 million sq ft. Pre-leasing accounted for 24% of quarterly take-up, as the three largest transactions of the quarter were all signed before building completion.

Total space under offer increased 30% quarter-on-quarter to stand at 3.1 million sq ft at the end of March. Under offers were up on the end of 2022 and were 19% ahead of the long-term average of 2.6 million sq ft. Occupiers continued to focus on best-in-class buildings, with 72% of total space under offer being for pre-let, newly built or refurbished space. This is ahead of the 10-year average share of 68%. There are 26 pre-let deals under offer, which was the highest number since early 2020.

Total available supply increased by 5.4% during Q1 to stand at 22.7 million sq ft at the end of March. This reflected a total vacancy rate of 8.9% and remained above the 10-year average of 5.5%. The increase in supply was largely driven by a rise in second hand space, which increased 8.5% during Q1 to reach 14.0 million sq ft. In comparison, the new build vacancy rates remained stable at 1.4% at the end of March and was marginally ahead of the 10-year quarterly average of 1.1%.

Investment volumes remained subdued in the first quarter of 2023, with £2.1 billion traded across Central London. This was significantly below the record Q1 of £5.3 billion traded in 2022 and 28% below the 10-year Q1 average of £3.0 billion. The number of deals remained low (28 deals), and was on a par with the final three-months of last year. However, there were six transactions in excess of £100 million traded - double the number in Q4 2022 - which boosted overall volumes and accounted for almost three-quarters of activity.

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