The latest on London Office Demand

London office lettings in December 2013 reached an impressive 1.5m sq ft – the highest monthly total of the year. In fact, 2013 ended with a bang as large transactions were signed in the last few days of the year involving Schroders, Hachette and Capita. There were 72 deals over 5,000 sq ft, which was also a monthly record for 2013.

The annual total fell just short of 12.2m sq ft in nearly 600 deals over 5,000 sq ft, which represents a huge 37% increase on the 8.9m sq ft of London lettings in 2012.

The good news for the fit-out industry is that over 5 million sq ft of the 12.2m sq ft transacted, was in grade A space, either recently built or refurbished, which represents a 72% increase from the 2.9m sq ft of top grade space let in 2012. A stream of lettings at schemes such as 20 Fenchurch Street, Leadenhall Building and The Walbrook helped to boost the total

Million sq ft
Grade A 5.52
Grade B 6.68

The lettings total grew every quarter, finishing on 3.5m sq ft in Q4

Million sq ft
Q1 2.62
Q2 3
Q3 3.1
Q4 3.5

The geography of the London office lettings in 2013 shows the dominance of the City of London and the relative lack of office availability in the West End. The table below also shows that Midtown and Southbank are capturing a high proportion of deals, with a number of schemes such as the Shard expected to announce more deals in 2014.

Million sq ft
City 5.10
Midtown 1.70
West End fringe 1.67
Southbank 1.30
Docklands 0.73
Victoria 0.54
North Oxford St 0.42
Mayfair 0.32
WC2 0.23
Soho 0.11
St James 0.08

In terms of the split by sector, the TMT (technology, media and telecom) sectors continued to dominate, followed by a recovering financial services sector, professional and business services.

Sector share by %

TMT 30.00
Financial Services 20.00
Professional 14.00
Business Services 11.00
Insurance 8.00
Energy 5.00
Recruitment 4.00
Representative 3.00
Other 3.00
Public Sector 2.00

The prospects for 2014 look good, with over 600 firms identified looking for office space in central London and a further 500 due to make decisions over approaching lease expiries this year.

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