New research indicates London office market resurgence with £3.2bn of investment

Research from Newcastle based property consultants Gerald Eve has highlighted a strong resurgence in activity in the London office market in Q3.

Occupier take-up increased 30 per cent to 2.8m sq ft, driven by large commitments by major London occupiers. It was the highest level of occupier activity since before the pandemic and only 7 per cent below the five-year quarterly average.

The trend is further evidenced by the emergence of a two-track market: a slight increase in central London availability (from 9.4 per cent to 9.6 per cent) and increases in Grade A rents in prime areas such as Fitzrovia suggest the market is polarised.

The widespread return to the office has also increased confidence in the investment market, with activity rising to £3.2bn in Q3, up from £2.3bn in Q2.

Commenting on the occupational market, Rhodri Phillips, partner at Gerald Eve, said: “By the end of September, visits to the workplace had risen to their highest point since before the pandemic following ‘back to school’ initiatives from many employers.

As businesses and staff find a new working rhythm, and competition for the best talent intensifies, the office has an important role to play, with our data suggesting that companies are acting decisively to secure high-quality space that fits with their business strategies.“

Lloyd Davies, partner at Gerald Eve, added: “Growing footfall in city centres and a recognition that an accessible and central base in the capital remains a priority for many London businesses mean investor confidence has returned.

“With travel opening up, we have seen some pent-up demand from overseas investors, who led the significant growth in volumes seen in Q3, with a clear preference for best-in-class assets, long leases and diversified tenants. Increased global competition for the finite pool of prime London assets points to some yield compression in Q4.”