Q3 2019 Central
Economic growth continues to soften, as the uncertainty surrounding the UK’s exit from the EU prevails. However, strong leasing activity continued during Q3 despite the uncertain business environment.
Recent PMIs suggest that sentiment over the third quarter was lacklustre, but the economy is likely to return to growth.
The labour market remains a bright spot, with employment levels at record highs which has supported real wage growth and consumer spending. With a further Brexit extension looming and the prospect of a General Election before the end of the year, the economy is likely to remain subdued in the short-term.
A total of 3.0 million sq ft was let, which was virtually on a par with the previous quarter when 2.9 million sq ft was transacted. This brought the year to date volumes to 8.2 million sq ft which was above the 10-year Q1-Q3 average of 7.2 million sq ft, albeit marginally down on the same period in 2018.
Pre-leasing continued to play an important role in the leasing market, although the focus has switched to schemes under construction rather than off-plan.
The investment market remained subdued, with just £2.6 billion transacted although it was ahead of Q2 when just £1.8 billion was completed. Overall volumes for the year to date reached £7.2 billion, which was 42% down on same period in 2018. UK investors were relatively active and accounted for 34% of volumes, which compares to just 22% in the same period last year.
Read more in the Q3 2019 Central London office market report.