‘Proliferation’ of startups and scaleups drives demand for smaller London offices

The London office market is increasingly moving towards the smaller end of the market, according to new data.

Research from property firm Colliers International suggests a higher demand for startup-sized offices is putting a downward pressure on lease lengths.

Across London in 2018 to date, transactions for space of 5,000 sq ft or less represented 78% of the total deals by number, up from 69% in 2015.

Colliers, which is forecasting the average lease to fall to 5.5 years during the course of 2018, said 2018 is the third successive year in which the proportion of sub-5,000 sq ft deals has risen.

Sub-2,500 sq ft offices represented 57% of the deals by number – the category’s highest level since 2012.

According to Colliers, the trend is particularly evident across Shoreditch, Soho and Paddington.

Guy Grantham, director for research and forecasting at Colliers International, said: “London is firmly established in the top three of global tech hubs and venture capital continues to help drive the evolution of the next wave of startups, as well as facilitating the proliferation of scaleups, creating demand and acting as an engine for absorption of office space.”

Stuart Melrose, director and head of occupier advisory for London offices at Colliers, commented: “We are seeing demand for flexible office space under 5,000 sq ft approaching an all-time high.

“An office of this size embraces startups, scaleups and maturing occupiers, many of whom have dipped their toes in the serviced offices water, only to decide that conventional office space offers more concrete branding opportunities and sends a more sophisticated message to potential clients.”