The latest research from JLL has shown that take-up across the City of London’s office market for the year to date now totals 5.9m sq ft. A further 1.4m sq ft of space is identified as under offer, suggesting that full year take-up will surpass the 6.2m sq ft of deals completed in 2017.
The City’s ‘traditional’ tenant, banking and finance has remained active and been responsible for a significant proportion of activity so far in 2018, acquiring over 1m sq ft. JLL expects that this sector will remain particularly acquisitive with over 2.4m sq ft of current active requirements in the City of London.
TMT, professional services and flexible office providers have all seen robust levels of take-up in 2018 and so-far have acquired 1.2 m sq ft, 1.1 million sq ft and 0.8 million sq ft respectively. Looking ahead, active demand for the City remains well above the 10-year average, with over 7m sq ft of enquiries currently searching for space – with demand spread across the occupier spectrum. In recent years the City’s tenant base has become increasingly diverse and JLL believes that this new mix of occupier is helping to protect the market against any sector specific shocks.
Dan Burn, head of City agency at JLL, said: “2018 has seen a number of large banking and finance operators, such as Investec Asset Management and TP ICAP, reaffirm their position in and commitment to London despite concerns that the uncertainty around Brexit may deter them from taking new space or delay decisions. The demand figures suggest that this sector will continue to take significant amounts of new space – driven largely by lease events but in part by expansion.
“The flight to quality has been a defining characteristic of 2018 and we have seen a variety of occupiers compete to secure the right space, which has resulted in rents of over £80 per sq ft being achieved on the best stock. Evermore so, occupiers are seeking buildings that have amenities that can create interesting working environments that help to attract and retain the best talent and, positively for the market they are prepared to pay for ‘best in class’ space.
“With the City of London’s office market set to end 2018 in a strong position and given the increased demand from a mixed tenant base and ever decreasing supply, we believe that overall rental growth may not be too far away.”