Strong September office leasing suggests 2022 total take-up will double that of last year
Notable September deals include: law firm Addleshaw Goddard signing part of the ground and second to seventh floors totalling 114,000 sq ft at 41 Lothbury, EC2 at £75 per sq ft on a 15-year term and tech giant Apple exercising their option to acquire the 20th, 21st and 28th floors at 22 Bishopsgate, EC2 (75,280 sq ft), taking its total occupation in the building to over 200,000 sq ft.
With an ‘under offer’ pipeline of 2.3 million sq ft, 64% ahead of the long term average for space ‘under offer’ at any point in the year (1.4 million sq ft), Savills expects total year end take-up to reach 5.5 million sq ft, exceeding 2021 annual total (4.9 million sq ft) and in line with the five year long term average (5.9 million sq ft).
Savills says c. 70% of deals ‘under offer’ are on recently developed or comprehensively refurbished space (or space included in the development pipeline) in an ongoing ‘flight to quality’ amongst office occupiers. Grade A space accounts for 89% of all office lettings to complete in the City in 2022 YTD the firm reports.
Stuart Lawson, City leasing director at Savills, comments: “Office leasing performance in the City of London has been notably buoyant in the month of September in a clear indication that the very best offices in the very best of locations remain a priority for occupiers. This is amplified by both a war on talent and a return to the office that is driving office leasing decisions and seeing demand for prime offices that will attract and retain talent remain strong. With reports of a slowdown in the development pipeline, this competition looks likely to increase further as the availability of prime offices reduces. The sheer number of live requirements in the market and Prime Grade A rents being at an all-time high (£84.56 per sq ft) is evidence to support this.”
Since the start of Q3 2022, Savills data shows there have been 12 activated searches looking at the City of London and Central London for over 50,000 sq ft – totalling 1.24 million sq ft. Overall current active requirements sit at 8.1 million sq ft, against a long-term average of 6.6 million sq ft.
Paul Bennett, director in Savills occupier services team in London, adds: “Occupiers in the market are seeking amenity rich buildings with excellent sustainability and wellness credentials. With businesses monitoring staff return to work numbers and adopting various working practices, in any relocation they are looking to earn their staff commutes by providing the best working environments.”