Despite Brexit uncertainty for much of the last few years office space leasing in London hit an all-time high in 2019, rising to 43% (6.4 million sq ft) of all take up across London.
Demand for office space predominantly comes from the financial sector which accounts for 25% of all office take up, with rising demand coming from tech firms and educational institutions.
And since the 31st January businesses are even more confident about the UK with many large commercial property deals taking place during this last month. One such deal was the acquisition of the Alban Gate building by Arax Properties, a London-based investment management firm, and King Street Capital Management, a New-York based hedge fund, from Blackstone. The 22-storey office block in the City of London was bought for £300 million and is home to Lloyds Banking Group.
Hong Kong listed Far East Consortium also recently acquired Ensign House, a 4,572-square metre building in Canary Wharf for £28.24 million, which is earmarked for a mixed-use project. Anecdotally I have also met with investors who now have renewed interest in the UK after more than three years of Brexit uncertainty. It seems that both UK and international investors are ready and willing to increase their UK holdings.
Beyond acquisitions, Cushman & Wakefield has also shown its renewed confidence in the London office market with the announcement last week that they’ve launched a new flexible workplace service – Indego. The flexible office space market is still on the up right now with the latest research from Boodle Hatfield showing that providers of co-working spaces grew their portfolios by 22% last year. Knight Frank and CBRE have also joined the sector, both recently launching their own flexible office brands.
I’m also aware that Amazon is searching for around 200,000 sq ft of new office space in London to add to its 600,000 sq ft at Principle Place and office in Holborn Viaduct. Linklaters too have just signed a lease for its new London headquarters. Effective from 2026, Linklaters will occupy more than 300,000 sq ft of space in 20 Ropemaker Street which is currently under construction.
Property investment firm Derwent London has also announced this week that it has increased its dividend by 10.5% to 51.45p per cent due to it having a “more confident outlook” for London’s office sector following December’s election result.
As for the rest of 2020, I have confidence that London’s office market will stay strong. 47% of space in the development pipeline is already pre-let and rents are expected to rise throughout the year.
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