Savills is anticipating take-up of approximately 8.2 million sq ft of office space across central London in 2022.
According to the international real estate advisor, central London occupiers have the equivalent of 8.5 million sq ft of lease events scheduled per annum between 2022 and 2024. At present the equivalent of approximately 20% of this consists of occupiers who are actively considering their options. Whilst some of these occupiers will stay in their existing offices, Savills says that when the fact that around 40% have been at their current locations for more than 10 years is taken into consideration, alongside heightened awareness of acquiring high quality space with good sustainability credentials for brand and talent related reasons, it suggests continued demand for this type of product.
Savills says it expects to see continued high demand for premium quality space particularly from the Professional Services sector, which currently accounts for 27% of active demand, followed by the Insurance & Financial Services sector (26%), for space in central London into 2022. The latter has accounted for 1.4 million sq. ft., (19%), of the overall amount of space acquired in the market so far in 2021, and also the highest volume of transactions to complete to date (23%).
Savills 2021 year-to-date analysis of current active requirements over 10,000 sq ft, shows that 55% of Financial sector occupiers are currently searching for a similar amount of space to the amount they currently occupy (within ~10,000 sq ft of their existing space), 27% are currently seeking to acquire 10,000 sq ft or more of additional space, with only 5% looking to decrease their footprint by 10,000 sq ft or more. This pattern is mirrored across the Professional Services and Tech & Media occupier groups too, says Savills (chart 2). Overall, its analysis indicates that if all occupiers with a current active requirement over 10,000 sq ft, were to acquire space in line with the minimum size of their requirement, this would still represent an increase of 7% on their current footprint.
Philip Pearce, head of Savills central London agency team comments: “At this point in December year to date take-up stands at 7.7 million sq. ft. (unsurprisingly surpassing 2020’s annual total by 62%) and with an increasing volume of requirements likely to come through next year, the signs are looking very encouraging for the market. Also positive is the data showing the vast majority of occupiers are currently not looking to reduce their net space, and that many actually may increase it, although this is subject to change as businesses continue to review their office space needs.
“The trend of companies viewing the office as an important tool to retain and attract talent is not going anywhere, and is going to continue to drive competition for the best spaces as businesses look to set themselves apart from competitors. Nonetheless, there will be more divergence in the way the office is used from occupier to occupier and from sector to sector.”
Read Savills Savills Central London Occupier Spotlight online here