London office vacancy rate ‘lowest since Lehman bankruptcy’.

[Published April 2011 and updated June 2023] The UK capital’s rate of office vacancies has fallen to its lowest level since the famous collapse of Lehman Brothers in 2008, according to commercial property consultancy Knight Frank.

Demand for office space in London has been steadily rising and office vacancies are now more than 50 per cent lower than their peak in mid-2009, the Knight Frank report states.

In the first quarter of this year, London had 16.7 million square feet of empty office space – just 7.4 per cent of the total.

Though some major office buildings are in the pipeline and some have just been completed – such as Heron Tower – London will not have enough office space to meet demand in the next few years it has been widely forecast.

Meanwhile, proposed plans for a new office building for Swiss banking giant UBS have recently been approved, which will allow the bank to bring all its trading operations under one roof. The City of London’s planning committee has given the green light to 700,000 square foot building at 5 Broadgate.

Recently a research report from BNP Paribas found that over the next few years, the financial services industry in London will add more than 11,000 employees and will need more space to house them. Over the next three years, the report found, the banks will need more than 1.6 million square feet more of office space – the equivalent to four times the office space in The Shard.

Tomorrow, the Office for National Statistics is to release GDP data for the UK, and many expect the figures will show a growing economy.

Editor’s notes: Reported in 2023, the annual office leasing volume in 2022 in Central London reached 10.1 million square feet, which was an 18 per cent improvement from the previous year.

In Q1 2023, London had 21.4 million square feet of empty office space which represented 8.4 per cent of the total stock.

With the number of mass layoffs in the technology, media and telecoms (TMT) sector, which represented 16 per cent of take-up in 2022, it was expected that vacancy rates would rise in 2023/24. However, the slowdown in new development starts due to rising construction costs may blunt it.

According to the UK Parliament website, compared to the pre-pandemic level, UK GDP in Q1 2023 was 0.5% lower.

The website also stated that the Organisation for Economic Co-operation and Development (OECD) forecasted that the UK GDP would rise by 0.3% in 2023 and by 1.0% in 2024.