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Central London lettings surge but available space up 73% YoY

[Image: Alex Tai/Unsplash]

Although central London offices experienced the most active quarter since the start of the pandemic, with letting activity at 1.9 million sq ft (176,516 sq m), 49% up on the previous quarter, availability increased for the sixth consecutive quarter.

The amount of available space was 22.9 million sq ft (2.1 million sq m), 6% up on the previous quarter but a 73% year-on-year increase, according to research from Avison Young.

Jeremy Prosser, principal, City office agency, Avison Young, said: “There continues to be a slow but sure uptick in demand for central London offices. With JLL, IBM and ITV all committing to significant new premises during Q2 and other large occupiers ready to commit in the third quarter, there is a real sense of momentum for Grade A space across central London.”

IBM’s was the largest letting. The firm took 157,120 sq ft (14,597 sq m) at Southbank Place in a sub letting deal. JLL took 134,000 sq ft at 1-2 Broadgate, EC2 and ITV signed 120,000 sq ft at Broadcasting Centre in Wood Lane, W12.

The TMT and Creative sector accounted for 25% of take up and was the most active sector Avison Young said.

Buoyant quarter for investment market

After a quiet first quarter of the year, London’s office investment market experienced a relatively buoyant second quarter, with an investment volume of £3.5 billion of which about £2 billion was transacted in June alone. The quarterly volume was 5% above the five-year quarterly average and 75% up on Q1 2021 volume.

Ten deals over £100 million completed during the period. The largest in terms of investment volume was Brookfield’s acquisition of 30 Fenchurch Street (formerly Plantation Place) in the City of London for £635 million in June.

Union Investments purchased the newly completed 1 Braham Street, E1 from Aldgate Development Holdings for £480 million at a net initial yield of 4.00%.

“German investors have been particularly active in the last quarter, and as restrictions ease for travellers across different parts of the world, this could likely release some pent-up demand from both Covid and Brexit for good value central London office stock,” said Avison Young principal, central London investment Chris Gore.