London office latest 5th January 2015

Central London leasing activity totalled 12.4m sq ft in 2014, the highest volume since 2007, when 12.7m sq ft was let, and 15% ahead of 2013 totals, according to research by Cushman & Wakefield.

All areas of the capital saw an upturn in activity during the year. The City of London office market recorded the highest volume of lettings for 15 years, with 7.2m sq ft of transactions completed compared to 7.4m sq ft in 1998, while West End lettings reached 4m sq ft; on a par with the last peak in 2007. Even Docklands saw take-up double in comparison to 2013 to exceed 1m sq ft for the first time since 2010.

While the Media & Tech sector continues to grab headlines on the back of several high profile deals, such as Amazon’s 431,000 sq ft prelet at Principal Place, EC2, and Omnicom’s 376,000 sq ft transaction at Bankside 2&3, SE1, 2014 witnessed a more balanced market, with a notable resurgence in activity from the Banking & Financial services sector and the Professional & Business Services Sector. Media & Tech take-up accounted for 28% of leasing volumes, while Banking & Financial services accounted for 22% — with transactions to M&G, Mizuho and ING boosting the figures.

The serviced office sector, in particular, is bourgeoning, seeing an increase of 78% year-on-year in leasing volumes to reach 1.2 million sq ft, with the recent letting to New York major co-working organisation Neuehouse at the Adelphi for 63,000 sq ft one of the sector’s largest transactions this year.

Three million sq ft of prelets were signed this year, which is the highest volume since the early 2000s and reflects the shortage of quality space, particularly for large requirements. Société Générale was the largest prelet signed this quarter, committing to 280,000 sq ft at 1 Bank Street, E14. There have been another seven prelets over 100,000 sq ft during 2014, with the aforementioned Amazon prelet being the largest prelet, and indeed largest transaction, in 2014.

Low levels of speculative development across Central London will result in a squeeze on supply in 2015 and supply will remain low by historical standards. Preletting is expected to remain a prominent source of leasing activity, while occupiers will become increasingly footloose in their search for suitable space.