Demand for central London offices is a third higher than the five-year average, according to the latest statistics from Savills.
At the end of March 2022, requirements stood at a record 10.6m sq ft, marking a 34% uplift on the five-year average.
The agent’s research shows that demand has been boosted by a number of significant office requirements from corporate occupiers previously headquartered elsewhere. Microsoft is reported to be looking for at least 500,000 sq ft as it makes the move from Reading, while GSK has plans to relocate from its west London base to new offices of up to 170,000 sq ft.
Jon Gardiner, head of central London office leasing at Savills, said: “We continue to see a rise of inward movers into London’s rapidly emerging new office districts – such as Novartis relocating in 2020 to new offices at White City from the Thames Valley – and the latest requirements from a number of major corporate occupiers is an extension of this. These companies see London as a key tool in the war for talent.”
As such “amenity rich, well-connected urban campuses”, such as King’s Cross, are proving increasingly popular. “We are on the cusp of seeing a raft of dynamic new ‘places’ which will become the fabric of a new London office market that serves opportunity-led occupiers,” said Gardiner.
Savills analysis also shows that more occupiers are increasing the amount of space they occupy – 29% – than decreasing it – 13%. The majority of central London occupiers, at 41%, are seeking to acquire a similar amount of space to the amount they currently occupy, which averages at around 10,000 sq ft.
Victoria Bajela, London commercial property analyst at Savills, added: “The higher level of corporate occupiers with upcoming lease events, partnered with the intensified war for talent, will likely continue to drive occupiers to use this as an opportunity to upgrade on their existing space.”
Concerns that rising costs will lead occupiers to take less but better-quality space have yet to make a statistical impact. “So far there has been little sign of this,” Bajela said.
“Furthermore, the role of more flexible space will play an increasingly bigger and more important role as occupiers seek to adapt their office portfolio to modern ways of working in the post-Covid environment.”