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Deals were done on 0.9 million sqft of offices in the City of London during the third quarter compared with 744,000 sqft in the second quarter, the real estate advisory giant CB Richard Ellis (CBRE) reports.
Overall take-up across each of the central London districts was stronger than in the previous two quarters of the year but – with 2.7 million sqft of offices let – the figures were down on the ten-year average of 2.9 million sqft.
CBRE’s analysts suggest that companies and employers based in London were generally cautious about prospects for the world economy in the third quarter and office space rental activity was therefore less strong than it might otherwise have been.
The financial services sector was cited as one key element of the London economy that was particularly affected in recent months by the fallout from world events and sluggish GDP growth across the UK, the US and Europe.
“It’s clear that the London office market has not escaped the deterioration in economic conditions and the lack of confidence amongst businesses has meant that occupiers are more cautious about making real estate decisions,” said Adam Hetherington, CBRE’s managing director in central London.
“While take-up has been generally weak throughout the year, the jump in leasing levels across almost all central London markets over the third quarter has been a positive sign.”
The scale of office space under offer in the various parts of central London stood at 1.1 million sqft at the end of September, which CBRE described in its report as “encouragingly high” and in line with the long-term average.
Editor’s notes: In 2022, office space take-up through lettings deals in the City of London totalled 5.2 million square feet.
This figure was 23% higher than the levels recorded in 2021, however, it was 6% below the 10-year annual average of 5.7 million square feet.
Take-up in the fourth quarter of 2022 had been 1.2 million sqft which was 9% lower than the previous quarter’s total and 18% below the 10-year quarterly average of 1.4 million sqft.
In the first quarter of 2023, the level of office space under offer increased by 5% to 1.5 million, which was the highest volume since the first quarter of 2020.