Demand for the Square Mile’s prime office space is rising, as the Corporation welcomes developers and investors to the Guildhall, as part of the annual London Real Estate Forum.
The latest JLL take-up forecasts for Central London show that leasing volumes continue to rise from the pandemic lows and are set to rise above the long-term historic average in 2025 (10.4 million sq ft). Pre-letting specifically in the accounts for a higher proportion of activity than the rest of Central London, with over 28% of floorspace pre-let in 2023, marginally above the five-year average of 27.5%.
Recent high-profile pre-lets have changed the rental profile for the Square Mile in recent years, with City office occupiers taking space at above prime rental levels, including at:
· 1 Leadenhall – 70% with strong interest in the remaining office space ahead of its targeted completion in March 2025.
· 40 Leadenhall St – 92%
· 1 Broadgate – 100%
· 2 Aldermanbury Square – 100%
· 8 Bishopsgate – 90% (now open)
These key schemes show a marked improvement on schemes over 50,000 sq ft built in the City, in previous years (2019-2023), which on average were 61% pre-let at completion.
JLL predict that this improvement in leasing volumes is anticipated to be led by activity in the City market, with expectations that average annual leasing in the next five years will be 10% up on the previous 10-year average, compared to 5% across the wider Central London market. As a result, the pressure on supply is anticipated to be much higher in the City market than the rest of central London over this period.
2023 saw a record 331 office leasing deals for the City, welcoming new occupiers like HSBC, Clifford Chance, Moody’s and a growing tech sector. Fortunately, the City’s planning pipeline is also thriving, with hundreds of thousands of square metres of new office space in various stages of negotiation and construction.
The City Corporation is set to attend Expo Real in Munich next month, one of Europe’s premier real estate conferences, to forge partnerships with organisations that are seeking to take advantage of this surging demand for office space and who share its vision for driving sustainability, to future proof the City’s real estate.
Chair of the Corporation’s Planning and Transportation Committee, Shravan Joshi, said:
“These pre-let figures show that the Square Mile faces a welcome challenge to meet increasing demand for the highest quality, sustainable office space. With projects in the City’s commercial real estate market gaining momentum and with our Local Plan set for approval next year, there is no better time to invest in London.
“With a 98% planning application approval rating, the has a healthy pipeline of development and hundreds of thousands of square metres of office space development currently under construction. This is coincidental with demand for new offices at record levels and with strong expectations of continued employment growth, which is in excess of the current projected construction starts.”
Ross Sayers, CPA Chair and Head of Development Management, Landsec, said:
“Major occupiers are continuing to seek modern, sustainable, amenity rich workspace to attract the best talent. The City’s ability to deliver these workspaces at scale, coupled with the City Corporation’s Destination City vision are making the Square Mile the obvious choice for major occupiers looking for their new home.”
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