EU referendum: Companies hunting for new London offices shrug off Brexit fears
Companies were still on the hunt for new offices in London in the first quarter of the year, despite fears that economic jitters and the prospect of a Brexit could stifle demand.
More than 3.1m square feet of space was snapped up, with Thomson Reuters' deal to decamp all of its staff to new 315,400 sq ft Canary Wharf headquarters lifting overall take-up in the quarter.
The findings, from property advisory firm CBRE, showed this was only marginally below the 10-year average of 3.2m sq ft, even though the first quarter is traditionally the quietest time of the year.
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Emma Crawford, CBRE's head of central London leasing, said: "Between a weak outlook for global economic growth and an upcoming vote on EU membership, businesses have had to contend with a heightened level of uncertainty.
"That demand for office space has remained so resilient speaks volumes for London’s ongoing attractiveness as a global hub for those companies hoping to lay down roots or expand their footprint in the capital."
She warned that the second quarter was likely to be more subdued as the day of referendum nears but anticipates a rebound in the second half of the year provided the UK votes to remain in the EU.
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CBRE said that the amount of office space under offer at the end of the quarter was unchanged from the previous quarter at three million sq ft, having been above the 10-year average of 2.8m sq ft since the beginning of 2014.
Meanwhile development activity in the capital has so far tracked demand, with supply increasing by two per cent over the quarter to stand at 12.2m sq ft – some 17 per cent below the 10-year average.
Separate figures from Colliers International showed tech and media firms continued to drive demand in the first quarter, accounting for 40 per cent of take-up across London. The next largest was the retail and leisure sector with 16 per cent of market share.
The amount of space being pre-let by companies ahead of the building being completed also rose quarter on quarter – with New Look, Zoopla and outsourcing firm Capita among some of the firms taking up space in new schemes at King's Cross, Tower Bridge and Fitzrovia.
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“The London office market has experienced a nervous start to 2016, influenced by volatile capital markets, less than stellar economic indicators and heel dragging by investors due to the Brexit referendum," said Guy Grantham, director of research and forecasting.
"Regardless, occupier markets have appeared relatively un-phased by external events with some high profile lettings and a healthy number of new large scale enquiries."