The demand for office space in London has grown significantly, a new survey from the Royal Institution of Chartered Surveyors (RICS) has found.
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In its recently released UK Commercial Market Survey, RICS found that in the first quarter of this year, 43 per cent more surveyors witnessed an increase in demand in the commercial property sector as opposed to a decrease.
Perhaps unsurprisingly it is London’s financial services industry which is fuelling most of the demand for more office space.
This demand, and the lack of supply, is also benefitting the South East region, which has seen increased demand as well, according to the survey.
However, the survey also noted that the rise in demand seen in London has not been replicated in the UK outside the capital.
Simon Rubinsohn, RICS Chief Economist said: “London still appears to be where most of the activity, whether in the investment or occupiers markets, is taking place. This is reflected in rising rental expectations, especially in the prime office sector and a healthy recovery in capital values.
“The survey does encouragingly suggest that demand to take up space is growing outside of the capital but not at a sufficient pace to change the mood on the rental outlook.”
And the UK construction industry is not expected to pick up either in the near future, according to RICS.
Kaye Herald, RICS Oceania Managing Director added: “The UK still has some hard roads to travel before coming out of its current economic slump. Restricted lending and increase building material costs along with insufficient demand are holding back any form of short-term recoveries in construction; however, compared with other asset classes commercial property still remains an attractive offer for investors.”
Meanwhile, Stuart Fraser, Policy Chairman at the City of London Corporation recently said that as a financial centre London was “the envy of the world”.
Editor’s notes: In Q4 of 2022 there was 8.6 million square feet of active demand in Central London from occupiers.
The total amount of office space leased across Central London in 2022 was 10.1 million square feet which was an 18 per cent increase compared to the previous year and slightly below the 10-year average of 10.3 million square feet.
The most active sector involved in office leasing across Central London was the banking and finance sector which accounted for 27 per cent of office leasing deals in 2022, followed by the professional services sector at 24 per cent and the technology, media and telecoms (TMT) sector which accounted for 17 per cent of the total. Notably, the TMT sector accounted for 29 per cent of letting activity in 2021.