Demand for Central London offices holds strong versus key European markets

BNP Paribas Real Estate’s analysis of Q3 2022 office take-up in 25 European Cities has revealed that demand in Central London registered the second highest increase across Europe versus equivalent levels in 2021.

Central London offices witnessed a 63% increase in take-up to 9.25m sq ft compared to the first nine months of 2021 where it stood at 5.67m sq ft, the second highest across Europe behind Dublin (175%) followed by Warsaw (+54%) and Madrid (+33%), with Central Paris and Milan both registering a +27% increase.

Ben Thomson, Head of Tenant Representation at BNP Paribas Real Estate commented: “Despite the hybrid working revolution, and some occupier consolidation, overall demand for office space has been incredibly robust this year. Occupiers are clear in what they want in a post Covid world: amenity rich spaces to retain and attract talent and clients, sustainable buildings which support their ESG ambitions, and prime locations close to transport hubs.”

James Strevens, Head of City Leasing at BNP Paribas Real Estate added: “While this trend is evident throughout key cities in Europe, its no surprise that demand in London has seen such a sharp recovery. As one of Europe’s largest urban economies, it remains hugely competitive on the world stage, attracting occupiers to its highly skilled talent pool, leading legal and regulatory systems, and influence over culture and arts.”

The Professional Services sector dominated Central London take-up with a 27% share followed by Banking & Finance at 19%. Central London rents increased by 6% over the past 12 months, with Warsaw (+13%), Milan (+10%) and Dublin (+9%) registering the highest uptick across Europe.

The Central London vacancy rate stood at 8.8% at the end of Q3 2022, with the West End at 4.4% and City 11.4%, with supply increasing by 2% to 19.97m sq ft.

Key Q3 Central London deals include the Addleshaw Goddard pre-letting 110,000+ sq ft at 41 Lothbury, Squire Patton Boggs acquiring 55,000+ sq ft at 60 London Wall and Linklaters LLP’s additional commitment of 51,000+ sq ft at 22 Ropemaker Street.