Active demand for office space in central London remains at record high levels, new research finds today.
Occupiers were looking for 13m sq ft of space between April and June, a similar level to the previous two quarters, according to Cushman & Wakefield’s latest Central London Marketbeat Report.
There was a particularly strong appetite for the highest quality grade A space, which accounted for 77% of leasing activity – the highest on record - in a continuing “flight to quality.”.
The most intense demand of all was seen for buildings with the highest environmental credentials. Changes to energy efficiency requirements means that most offices in London will not meet the minimum standard for leasing within the next four years.
Leasing activity across Central London increased to 2.13 million sq ft, up by 29% compared to the previous quarter. While overall leasing volumes were 21% below the ten-year average in the first half of 2024, grade A leasing volumes were a percentage point higher. The City continues to outpace West End, with activity levels nearly 70% higher
Supply across central London reduced during the quarter to 27.3 million sq ft, but was still 61% above the ten-year average of 16.92 million sq ft. As a result, the vacancy rate decreased by 18 basis points to 9.4% in Q2, with the grade A vacancy rate at 5.4%.
Andy Tyler, head of London office leasing at Cushman & Wakefield, comments: “While historically high vacancy rates underscores ongoing challenges in the market, we’ve further observed a stabilisation in supply levels over the past five quarters. With the majority of occupiers focussed on Grade A space there is an increasing awareness that the availability of the best in class space is under increasing pressure.”
“Looking ahead, the constrained development pipeline suggests a tapering of new office space entering the market. This should lead to a gradual decrease in both overall and grade A vacancy rates over the coming year, and fuel rental growth, particularly at the top end of the market.”
