Tertiary education institutions have been expanding their London footprints at an unprecedented pace over the past year in response to growing student numbers and the need for reconfigured campus models, according to Knight Frank.
This has seen a flurry of leasing activity involving both private and public education groups for commercial office buildings with strong sustainability credentials that can support a variety of technology-enabled learning methods.
The first quarter of 2023 has seen 100,648 ft2 (9,350 m2) of space taken, 376,059 ft2 during the last 12 months and almost 20% above the annual long-term trend.
The largest transaction of the quarter was by the University of Teeside who agreed to lease 26,720 ft2 at Stratford’s innovation and technology business park Here East as its new London campus.
Similarly, York St John University agreed to a 22,000 ft2 lease at the Export Building at East India Dock, just north of Canary Wharf, in addition to the 24,000 ft2 acquired last year.
Education institutions are currently searching for 492,000 ft2 of space in London, the highest ever on record. The UK capital’s university student population grew by 8% in 2022, according to UCAS, with the number of non-EU students increasing by 17%, the fourth year of double-digit growth.
Surge continues from 2022
London has seen a significant increase in take-up from education occupiers since the start of 2022. Last year saw leasing transactions totalling 452,525 ft2 of space in commercial office buildings, a 73% increase compared to 2021 and the highest level of annual take-up since 2015, when transactions totalled a record 463,000 ft2.
The average deal size over the past year has been 25,143 ft2, the highest ever for education sector occupiers. Recent transactions also demonstrate the drive to best-in-class buildings that meet the highest ESG standards, with 81% of the space taken since the start of 2022 being for new or comprehensively refurbished space, compared to the office market average of 60%.
Over half of the education sector take up over the past year has been in East London’s submarkets. Institutions were particularly active in the corridor between Aldgate and Whitechapel, accounting for 165,000 ft2, representing over 35% of all office market transactions in the area.
They also accounted for 20% of all leasing transactions in Docklands and Stratford as well as just over 15% in the Strand and Covent Garden sub-markets.
Demand for green-rated office buildings
Many of the largest transactions were driven by non-traditional universities, with BPP University taking 85,261 ft2 of space at the newly refurbished 1 Portsoken Street building in Aldgate as its London campus and headquarters.
The education group took an additional 17,000 ft2 of space in February this year at the same site, which went through a comprehensive refurbishment programme before completing in 2021.
The Fashion Retail Academy also agreed to pre-let 55,542 ft2 of space at Electra House in Moorgate with plans to move in upon its completion in September 2024. The campus at Electra House, which is currently undergoing a £30 mln (€34 mln) refurbishment, will be twice the size of its current footprint in Gresse Street.
October 2022 saw New York University take 73,000 ft2 at 265 Strand, located in the knowledge cluster alongside London School of Economics and Kings College London. The building is also set to undergo a comprehensive refurbishment to improve sustainability credentials to a minimum EPC rating of B and BREEAM Excellent score.
Shabab Qadar, London research partner at Knight Frank, commented: 'The concentration of institutions in East London’s submarkets reflects a strategy to co-locate in knowledge clusters alongside other public and private sector companies to foster partnership opportunities.
'The arrival of the Elizabeth Line has also contributed to an uptick in them gravitating to those areas, with many looking to move into new and refurbished buildings affording the flexibility for technology-enabled blended learning.
'Decisions have undoubtedly been driven by the desire to occupy modern buildings with stronger green credentials to meet sustainability targets whilst being located in amenity-rich developments that offer a compelling student experience.'
