Welcome to your latest Central London office market watch, exploring insight from the City and West End office occupational markets
Across the Central London market
Take-up across Central London reached 1.21m sq ft in April, with the City market recording nearly as much activity in just one month as it did throughout the entire first quarter. Leasing during the month was boosted by a number of large transactions, with three transactions sized over 150,000 sq ft completing in the City and one transaction sized over 75,000 sq ft completing in the West End.
This brought year-to-date take-up to 3.2m sq ft, which is up 11% on the long-term average for the same period, with market sentiment remaining positive. Further to this, the number of transactions that have completed so far this year is up 9% on the five-year average, with the highest volume of deals over 50,000 sq ft recorded for this period since 2019.
The largest transaction to complete during April was Squarepoint Capital’s pre-let of the entire building at J.P. Morgan’s 65 Gresham Street, EC2 (394,567 sq ft). In the West End, the largest transaction to complete during the month was Union Bancaire Privée acquiring the entire building at Marylebone Place, 1 Wyndham Street, W1, (77,206 sq ft) on confidential terms.
The average prime rent for the West End stands at £168.75 per sq ft, which is up 11% on the same period in 2024 as a result of a pick-up in prime activity in the Core
Victoria Bajela, Director, Commercial Research
The strong and ongoing occupier preference for newer quality office space remains evident, with 93% of all space acquired this year being of Grade A standard, and 77% of this consisting of leasing in newly developed or extensively refurbished office buildings.
Whilst we saw space under offer dipping down 10% on the previous month to 2.7m sq ft, as a result of robust leasing activity during April, overall levels of underlying demand continue to remain strong, with active demand at 14.1m sq ft, up 3% on the start of the year.
At present, the average prime rent for the West End stands at £168.75 per sq ft, which is up 11% on the same period in 2024 as a result of a pick-up in prime activity in the Core; meanwhile, the City average prime rent of £96.89 per sq ft remains in line with the same period during 2024, although we are anticipating average prime rental growth of 4.5% for the City this year.
City Highlights
West End Highlights
Drivers of demand
It will come as no surprise that, so far this year, there has been a continuation of the strong levels of leasing demand from the Insurance & Financial sector, with the sector accounting for 30% of space acquired as at the end of April. This follows on from 2024, where the number of transactions completing in the sector across Central London reached a record level with 211 transactions and with the overall sq ft acquired nearing an all-time high only surpassed by 2023.
But looking more specifically at what Financial Services sub-sectors have been driving this demand so far this year, the Alternative Investment (Private Equity, Venture Capital, and Hedge Fund) sub-sector has accounted for the majority (56%) of space acquired by the sector, with the outlook for this sub-sector in the capital continuing to remain strong. This has largely been reflective of the activity we have seen from this sub-sector over the past 18 months, with this sub-sector accounting for just shy of a quarter of overall Insurance & Financial sector take-up during this period.
There have also been strong levels of leasing activity from the Insurance industry. Over the past 18 months, Insurance firms have acquired just under 1m sq ft of new leases (virtually all in the City market), which equates to around a quarter of activity within this sector. In fact, during 2024, we saw leasing within this sub-sector reach its highest level on record since the pandemic, with around 872,000 sq ft acquired, with the diverse Insurance sector ecosystem in London helping to keep it globally competitive.
At present, the Professional Services sector accounts for the largest proportion of active demand, with 24%, compared to the Insurance & Financial Services sector, with 23%
Victoria Bajela, Director, Commercial Research
Going forward, though, we could see a shift in the sub-sectors driving demand across Central London, with active demand and under-offers currently giving strong indication that there will be more of an even distribution in demand this year between the Professional Services sector and Insurance & Financial Services sector. At present, the Professional Services sector accounts for the largest proportion (24%) of active demand compared to the Insurance & Financial Services sector, with 23%.
Already the Legal sector has been the most active sub-sector over the past 18 months, accounting for over 1m sq ft of leasing across 54 transactions and, at present, just shy of 2m sq ft of active Central London demand consists of Law firms, a third of which have been located at their current premises for 15 or more years. This overall sector lead is further boosted, with strong levels of underlying demand from the Accounting and Auditing sub-sector.
Currently, the top 15 most active sub-sectors (see chart below) account for 80% of total active demand, illustrating the growth and high performance in these particular industries as London’s occupier base continues to diversify. Furthermore, with 56% of these companies at present seeking to take additional space or increase the size of their current office and a further 27% seeking to take a similar amount of space, the outlook on leasing remains positive.
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