Q3 2023 Central London Office Market Report

Report on leasing and investment activity for the central London office market in Q3 2023

October 24, 2023
  • Chris Valentine
  • Julian Sandbach
  • Elaine Rossall
  • Hayley Mooney

Our latest research provides valuable insights into the trends shaping the office market in Central London during this period.

Leasing activity remained resilient, with the highest quarterly volumes of the year, totaling 2.2 million sq ft. While this surpassed the previous quarter's performance, it was slightly below the long-term average. The year-to-date take-up reached 6.3 million sq ft, reflecting a decrease compared to the same period in 2022.

Throughout Q3 2023, notable transactions included Kirkland & Ellis exercising their option space on 170,000 sq ft at 40 Leadenhall Street and John Lewis acquiring 109,000 sq ft at 1 Drummond Gate in the West End.

The Service Industry sector was at the forefront, accounting for 30% of the quarterly volumes. Retail & leisure, insurance, and service office operators' subsectors drove this activity. The banking & financial and professional services sectors also remained active.

With 3.4 million sq ft of space under negotiation, the flight to quality continued. A significant portion of the total space under offer was for pre-let, newly built, or refurbished stock, indicating the market's preference for high-quality spaces.

Occupier demand remained robust, with 11.5 million sq ft of active requirements in Central London, surpassing the long-term average by 27%. The banking & finance sector led the demand, followed by professional services and the TMT sector.

Regarding existing supply, Central London's overall vacancy rate stood at 9.6%, above the long-term average. Tenant-controlled space represented a substantial part of the market, with 28% of total space available. New build supply remained stable, with 4.0 million sq ft, and refurbished supply remained at 5.9 million sq ft.

Prime rents increased, with the West End reaching £135.00 per sq ft and the City at £77.50 per sq ft. Premium rents were achieved for pre-let transactions and prime locations.

Investment volumes decreased in Q3 2023, totaling £1.12 billion, influenced by market dynamics. Overseas investors played a dominant role, with European and Asia Pacific investors leading the way.

To dive deeper into the findings of the Central London Office Market Report for Q3 2023, we invite you to download the full research through the link below. Explore the comprehensive analysis and gain invaluable insights to inform your commercial real estate decisions.

Download the full Central London Office Market Report for Q3 2023 here.

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