2023-10-25-莱坊-The_London_Office_Market_Report_Q3_2023_13页_11mb

London Office Market Q3 2023 Summary

Overall Market Trends

• Take-up increases for second consecutive quarter, with strong demand in core submarkets, largely driven by tech/media/telecoms and financial sectors.
• Prime yields stabilize across all regions (City at 5.25%, West End at 3.75%, Docklands at 6.50%) due to reduced borrowing costs.
• Construction delays extend completion timelines, expected from 2024–2026, with limited pipeline beyond 2025.
• Investment volumes decline slightly, but private investors dominate, accounting for ~62% of deals and £804m, signaling a shift away from institutional investors.

Regional Performance

1. West End:

   • Take-up rises (+£5 to £140.00 psf) in core & Marylebone submarkets.
   • High rental tension due to acute supply issues, but fewer speculative developments.
   • Key deal: Sale of Bloom (173k sq ft).

2. City & Southbank:

   • Strong take-up (+31% q-o-q) led by professional services and financials.
   • Prime rents rise by £2.50 to £77.50 psf.
   • Available space decreases 2.4% to 14.75m sq ft, vacancy 10.8%.

3. Docklands & Stratford:

   • Take-up increases (+119% q-o-q, 156k sq ft).
   • Prime rents stable at £55.00 psf.
   • Availability falls 4.9% to 3.91m sq ft due to limited pipeline.

Key Events

• Kirkland Ellis exercises 173k sq ft option space at 40 Leadenhall.
• John Lewis temporarily relocates 108k sq ft to 1 Drummond Gate.
• Significant completions: Blossom Yard, 25 Baker Street, and The Printworks.
• Record investments: Landsec acquires The Printworks (£90m) and Bloom sold (£216m).
• Technology & media sector drives ~18% of total take-up, highest increase among sectors.

Outlook

• Supply remains tight until 2026, creating rental tension, despite weaker construction activity.
• Strong fundamentals but increased risk appetite sees more value-add deals.
• London remains a global hub, though sentiment cautiously improves post-global GDP uncertainty.