Central London Office Market Snapshot For Q1 2023

We are pleased to share our latest edition of DeVono’s Central London Office Market Snapshot for Q1 2023.

The end of 2022 was marked by mounting inflationary and recessionary pressures and widespread uncertainty. Whilst the start of the year has seen business confidence rebound a little, firms have remained cautious with their office strategy in Q1 2023, filtering through to reduced leasing, which in turn has given rise to higher availability levels. The latter being further stimulated by a raft of new developments.

Prime rents continued to rise, with the very best quality spaces setting new high benchmarks for some locations. However, those occupiers that are more amenable to flexible spaces can breathe a sigh of relief as the growth of serviced pricing has slowed this quarter.

In this edition, we take a close look at office market activity across Q1 2023, we highlight the latest trends in office leasing, rents, availability, and serviced office pricing.

Here are some of DeVono’s highlights from the London Snapshot:

LEASING SLOWS DOWN

• Slow start to the year with leasing down 21% on the previous quarter to 2.6 million sq ft
• Average Deal Size is 24% below the short term quarterly average
• Lease commitments shorten further, down 2% on the previous quarter to 5.5 years
• The financial Sector accounted for the greatest share of take-up – 25%
• Technology sector was the only occupier grouping to see take-up rise on the previous quarter, by 128%
• The Southbank was the only market to see increased qtr-on-qtr leasing, up 21%, now at its highest since Q3 2021

RENTAL GROWTH KICKS INTO GEAR

• Prime Grade A rents grew by an average of 3% from Q4 2022 to Q1 2023
• 8 markets set historic rent highs, with Mayfair/St James’s Super Prime offices attracting rents in excess of £170.00 per sq ft
• Rents for Tower Spaces in the City are set at £110.00 per sq ft, a third higher than Prime Grade A rents in the rest of the market.

NEW DEVELOPMENTS BOOST AVAILABILITY

• Total office availability equated to 23.4 million sq ft, up 4% on the previous quarter
• Docklands availability reached its highest level since 1993, standing at 3.6 million sq ft
• The volume of Grade A space available increased 13% on Q4 to 7.7 million sq ft – highest level for 20 years

FLEX PRICING REMAIN STATIC

• Grade A serviced office pricing stands at 12% above the average for Q1 2022 at £812 per desk, per month, representing negligible growth on the previous quarter
• No movement in Grade B serviced pricing recorded in Q1 2023, remaining at an average of £486 per desk, per month
• However, 5 office submarkets surpass the £1,000 per desk, per month benchmark

Download the full report here.

Here is what to expect from our insights on the latest market dynamics and trends that are influencing workplace decisions.

PG 2: Central London Office Market Snapshot Infographic providing a roundup of the key market trends from Q1 2023

PG 3: Office leasing headlines: Quarterly office take-up, average deal size, average lease length.

PG 3-4: Office leasing activity in detail: Share of total leasing by sector, largest deals transacted this quarter, share of total leasing by central London submarkets, trend of number of leasing deals.

PG 5: Office availability highlights: recent trends, office availability by submarket, boost in volume of Grade A space, future outlook.

PG 6: Office rent highlights: accelerated rental growth, Q1 market rent guide by grade and submarket.

PG 7: Flexible office price guide: key trends and outlook, flexible office pricing for serviced office and managed office by submarket.

PG 8: Exclusive with DeVono: Check out office space that we are disposing of on behalf of our clients.

PG 9: Other DeVono Publication Insights

Click on the report image below to download the document.