office market report – London Office Buzz

The London Office Market in 2024 – At a Glance

The central London office market continues to shift in line with previous years’ trends, such as generalised downsizing due to hybrid work arrangements, a flight to quality, and a limited development pipeline. Although the first quarter of 2024 showed evidence of a slowdown in activity, this slow start of the year isn’t concerning considering that the market ended 2023 on a five-year high.

Here are some key indicators that summarise the status of the London office market in 2024:

– Total take-up levels were 2.47 million square feet in Q1, vs. 2.1 million square feet during the same period in 2023.

– Vacancy rates city-wide have increased to 9.5% in Q1 2024, vs. 8.9% in 2023.

– Lastly, the amount of office space under construction also remains stable, with 15.86 million square feet in 2024 vs. 16.75 million in 2023.

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Central London Market Overview

Over the past few years, most major UK office markets have witnessed an occupier flight to quality. The priority seen when it comes to the leasing and acquisition of high quality office space is understandable, particularly when you consider the volatility and uncertainty that dominated the global commercial real estate market in recent times. As a wide range of businesses, particularly SMEs, continue to be unsure about whether or not in-person working will return to prior prominence. This reality makes putting pen to paper especially difficult, as physical occupancy levels remain difficult to gauge and physical spaces become harder to justify.

A flight to quality makes sound investment sense in a volatile market, largely due to high-end assets tending to at least retain their value during periods of uncertainty. Additionally, large firms with a heavy investment in the smooth transition back to the office, both in terms of time and money, have sought to secure quality space to attract their workforces back in a physical capacity.

This priority for tenancy in Grade A office space has been extremely clear in London for a number of years, resoundingly consolidating itself during the pandemic and continuing to show no signs of abating.

So, how exactly is the Central London office market faring after years of upheaval? In this Central London office market report, we take a look at the most current industry data, explore ramifications of this data, and predict where currently observed trends will lead us.

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