Amid lower overall take-up levels, the focus on Grade A office space increased, according to the latest figures from Cushman & Wakefield.
Take-up of office space in Central London fell by 28% to 3.74 million ft2 in the first six months of 2023 compared with the year-earlier period, against an uncertain macroeconomic backdrop, new research from Cushman & Wakefield shows. Compared to the five-year H1 average, take-up was down 9%.
However, Grade A volumes increased, recording a 2% rise compared with this time last year and gaining 7% on the five-year H1 average. This, said C&W, shows occupiers are continuing to focus on the best buildings and locations.
Heena Gadhavi, from the firm’s UK Research & Insight team, said: ‘The Central London occupational market has held up despite a cautious macroeconomic outlook, and the best quality schemes continue to lease well.
‘Although overall leasing activity is down, businesses are more aware than ever of the importance of attracting the right talent with high-quality and well-located spaces. This is reflected across Central London, and no more so than in the record-breaking proportions of Grade A take-up in the West End.’
Whilst the City market took the largest share of H1 leasing volumes, in the West End, Grade A volumes accounted for 78% of its total take-up, the highest proportion on record in this submarket.
According to C&W, 3.55 million ft2 of space was under offer across the market at the end of June, up 19% on the five-year quarterly average, and a 12% increase from the end of Q1 2023.
Of the space under offer, 74% is for Grade A offices, ‘reinforcing the ever-growing appetite for high-quality space across the market’, the firm said.
Around 5.41 million ft2 of office space is currently under construction and is due for delivery in the second half of 2023, of which 29% is already pre-let.
In the investment market, £8.5 bn has traded across the market in the 12 months to the end of Q2 2023, and as with the leasing market, acquisitions in the West End made up a large portion of activity during the quarter.
Gadhavi added: 'As we look towards the second half of 2023, we expect to see a continuation of activity at the smaller end of the market, as well as demand for assets that provide value add opportunities – both for occupiers and investors – and, overall, a gradual increase in transaction volumes as investors gain greater confidence over pricing levels in the market.'
