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London office market summary
- London office demand was stable in Q1 as occupier take-up reached just over 3.1m sq ft. This quarter marked the highest number of lettings since before the pandemic though and activity was focused in the smaller size bands.
- Tenants are now voting with their feet for best-in-class space, with ESG, namely sustainability, at the forefront of decision making. Increasingly, what occupiers demand from an office is influenced more by subjective business-linked or staff retention requirements than overall cost.
- Two consecutive quarters of above-average demand contributed to another quarterly fall in availability in London, as the rate declined by 0.6%-pts, reaching 8.1% in Q1.
- Headwinds to construction activity remain as construction costs over 2022 are anticipated to be 5% above the expected level at the end of last year.
- Investment amounted to just under £3.5bn in Q1, an increase of 13% on Q4 and 18% above the 5-year quarterly average. Overseas investment returned with a bang, shaking off the travel disruptions prevalent in the early stages of the year.
