Subdued demand sweeps London office market as Grade A stock hits decade-low
Demand in London’s office market is faltering, as businesses grow increasingly picky about the quality of the spaces they occupy post-lockdown.
According to property consultancy Gerald Eve, demand has fallen from its recent peak of 9.4 per cent in the second quarter of this year, to 8.2 per cent over the past few months.
Political and economic uncertainty has weighed on uptake in recent weeks, said Rhodri Phillips, a partner at the London-based property consultancy, with businesses adopting a ‘stay put’ mindset.
“There are likely to be some occupiers who seek to delay leasing decisions given the macroeconomic pressures,” he said, adding that “demand for premium office space continues to be robust, and prime supply is increasingly tight.”
The availability of Grade A office space, the most premium spaces in London, is at its lowest level since 2010, according to separate research from real estate services firm Cushman & Wakefield today.
“Assuming consistency of demand, we would expect further rental increases for quality Grade A space in London by the end of the year,” Andy Tyler, the head of London office leasing at commercial real estate broker Cushman & Wakefield explained.
Phillips agreed, saying the imbalance at the top end of the market has continued to push up headline rents and “there are several other large deals under offer that look set to continue this trend”.