City and West End rents for top quality office spaces have improved in what will be a welcome update for landlords in a tough leasing market, as new data shows total take-up has slumped.
Provisional figures from property consultancy Savills found 1.94 million sq ft of central London office deals were signed in the third quarter. That is 35% down on the 10- year long term average and 24% below the five-year average.
A number of landlords have seen would-be tenants take longer to commit to lettings as they reassess how much space they need for hybrid working. Several employers are also looking to trim real estate costs, or exit older space for more modern buildings.
However underlying demand for high quality space looks solid. Average prime rents for the West End have risen over the last year 15% to £150 per sq ft and improved in the City to £88.06 from £85.61.
Jonathan Gardiner, head of central London office agency at Savills said: “It’s no secret that the challenging economic backdrop has affected central London office take up this year.”
He added: “There continues to be increasing polarisation between demand for prime and more vanilla grade A stock, with no let-up in demand from occupiers wanting the highest ESG credentials. There is a good pipeline of requirements in the market at the moment but with supply for prime space in particular being more constrained we expect competition from occupiers for the very best buildings.”
