Q4 2022 Central London office market report

Amidst the challenging economy, the leasing activity in Central London slowed for the second consecutive quarter in 2022.

January 19, 2023
  • Julian Sandbach
  • Rob Corbett
  • Chris Valentine
  • Jeremy Attfield
  • John Woodger
  • Elaine Rossall
  • Hayley Armstrong

The leasing activity slowed for the second consecutive quarter, as the challenging economy started to impact on business sentiment. Quarterly take up reached just over 2.1 million sq ft, which was 20% below the previous quarter. Annual leasing volumes across Central London reached 10.1m sq ft, which was 18% ahead of volumes recorded in 2021 (8.5m sq ft) but marginally lower than the long-term annual average of 10.3m sq ft.

Total space under offer fell to 2.4 million sq ft at the end of Q4 and has fallen slightly below the long-term average of 2.6 million sq ft. Occupiers continue to focus on best-in-class buildings, with 37% of total space under offer being for pre-let stock, with a further 37% on newly built or refurbished space.

The total vacancy rate rose for the second consecutive quarter to 8.4% and remained above the long-term average of 5.4%. There was an uplift in new build supply across Central London as over half a million sq ft of speculative developments completed during the quarter. New build supply stood at 3.75 million sq ft at the end of December, reflecting a vacancy rate of 1.5%. This remained above the 10-year quarterly average of 1.1% but still marginally below the level recorded at the end of December 2021.

As anticipated, investment volumes were subdued in the final quarter of the year reaching just £1.2 billion across Central London. This was 68% below the 10-year quarterly average (£3.7bn) and the lowest quarterly volumes since Q2 2020. Full year volumes saw £12.2 billion traded across Central London, which was below the £13.3 billion transacted in 2021 and 18% lower than the 10-year annual average of £14.8 billion.

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