Q2 2023 Central London Office Market Report

The latest update on the performance of the Central London office market in Q2 of 2023. 

July 21, 2023
  • Julian Sandbach
  • Rob Corbett
  • Chris Valentine
  • Jeremy Attfield
  • John Woodger
  • Elaine Rossall
  • Hayley Mooney

Welcome to our Central London office market report for the second quarter of 2023. In this report, we provide a snapshot of key statistics and developments that have shaped the market during this period. For a comprehensive analysis, you can download the full report below.

Leasing activity

Leasing volumes in Central London remained subdued in Q2 2023, with only 2.0 million sq ft transacted. This figure was 20% below the 10-year Q2 average and also lower than the same period in 2022, which recorded 2.7 million sq ft leased. Year to date, leasing volumes reached 4.0 million sq ft, marking a 24% decline compared to the equivalent period in 2022 and falling 15% below the long-term H1 average.

Investment activity

Investment volumes in the Central London office market experienced a decline in Q2 2023, falling by a third to just over £1.4 billion. Year to date, investment volumes amounted to £3.6 billion, reflecting a significant decrease compared to the £7.7 billion traded during the equivalent period in 2022. The H1 2023 investment volumes were also 41% lower than the 10-year H1 average of £6.0 billion.

Space under offer

Despite muted leasing volumes, there is a positive development with the total volume of space under offer. It continued its upward trajectory for the second consecutive quarter, reaching a four-year peak of 3.7 million sq ft by the end of June 2023. This indicates potential activity in the pipeline, suggesting a hopeful outlook for the upcoming quarters.

Vacancy rates and supply

The Central London vacancy rate increased to 9.4% by the end of Q2 2023, up from the previous quarter's 8.9% and well above the long-term average of 5.5%. This increase was primarily driven by newly built and refurbished stock, with over 1.4 million sq ft of speculative completions across the market during the quarter. It aligns with expectations that vacancy rates would rise throughout 2023, following a series of speculative development completions.

To delve deeper into the insights, analysis, and commentary of the Central London office market for Q2 2023, download the full report below.

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