2021-06-07-莱坊-The_London_Office_Market_Report_Q2_2021_15页_5mb

Summary of London Office Market Report Q2 2021

The London office market showed a soft recovery in Q2 2021, following pandemic-related restrictions. Occupier demand rose, with take-up increasing to 830,000 sq ft, though still below the long-term average of 3 million sq ft. The recovery was driven by financial and insurance companies (almost 25% of take-up), professional services (around 20%), and technology, media, and telecoms firms (approximately 13%). Active demand rose by 18% to 4.66 million sq ft, indicating improved occupier sentiment.

Vacancy rates increased slightly, reaching 7.8% across London, up from 7.5% in Q1. Availability grew by about 800,000 sq ft to 18.73 million sq ft, with most space being secondhand (83%). New and refurbished space accounted for 17% of the stock. Turnover reached £3.1 billion, bouncing back from £1.3 billion in the previous quarter, largely due to overseas investors acquiring key properties like 30 Fenchurch Street for £635 million.

Prime rental rates continued to rise in core markets, such as £72.50 per sq ft in the City and £115 per sq ft in the West End, supported by low vacancy and strong demand for quality spaces. However, tenants favored smaller floorplates due to wellness and ESG requirements. Development completions contributed to inventory, and speculative pipelines included schemes awaiting pre-lets.

Investment activity rebounded significantly, with £2.29 billion in turnover, though some risks remain, including potential corporate distress if government support ends and revenues do not recover, which could increase vacancy in certain submarkets. The market's resilience was noted, with occupancy rates improving and prime yields stable in most areas.

Overall, the market demonstrated signs of recovery amid vaccination efforts, but occupier caution persists in the short term.