The amount of central London office space businesses signed for shrunk by a third in the first half, according to new figures that suggest economic uncertainty is stalling moves and the rise of hybrid working is impacting demand.
There was 3.9 million square feet of space let in the six months to June 30, provisional data from Knight Frank for the Evening Standard calculates.
The property agent said that was down from 5.8 million square feet a year earlier. There was 6 million square feet in the same period pre-pandemic in 2019.
The figures come at a time when many firms have said they will downsize offices, such as HSBC which is leaving its Canary Wharf home.
Across various sectors hybrid working has become more mainstream and employees often work from home for at least part of the week. Corporates that are moving are frequently focused on securing the best space.
Shabab Qadar, head of London research at Knight Frank said the softening seen in take-up was primarily due to the current economic uncertainty impacting corporate decision making.
Qadar added: “Almost two thirds of office leasing deals completed in the period were for new or newly-refurbished space, underlining the ‘flight to quality’ with occupiers demanding best-in-class office space that will attract staff and drive collaboration and productivity.”
He also said: “Businesses are typically favouring buildings that offer flexible floorplates, terraces, cafes and wellness amenities as well as excellent sustainability credentials to support their ESG goals. Moving forward we will see more refurbishment activity as property owners reposition older space to meet modern occupier needs.”
Deals inked during the first half included Chanel doubling its London space with a new home at 38 Berkeley Square, and law firm Dentons finalising plans to move to around 67,500 square feet at One Liverpool Street in 2026.
