STICKING WITH THE TRADITIONAL

Even with a lockdown, it seems as though the share of leasing by market and subsequent ranking has not shifted. The City followed by the West End, Docklands, Midtown, and so on continues to highlight occupier preference of location. However, the reduced level of leasing with the latest raft of deals has highlightedthere is not so much of a difference
between the markets.

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The City office market accounted for a 32% share of the leasing across central London. Whilst this represents the largest proportion in Q2 2020, it is down on the long-term quarterly average of 40%. It is also the lowest share of take-up in the City since Q2 2017 (29%). The actual volume of space leased is now at its narrowest gap with the West End since Q4 2015, with just 66,000 sq ft difference, highlighting the relative resilience of the West End.

With a 26% share of take-up in Q2 2020, the West End is only slightly below its longterm average of 28%. Despite this leasing in the West End is down by two thirds on the level recorded in Q1 2020 and 65% below the average. 

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The only office market to buck the trend this quarter is the Docklands. At a 24% share of leasing activity, this is significantly above the longterm average of 6%. The large transaction by BP in this market ensured that leasing increased in Q2 2020 by 659% on the previous quarter. The leasing activity is not only above the quarterly average (196,453 sq ft) but is the largest volume of take-up since Q3 2019.

Occupier demand in Q2 2020 was low in 8 of the 9 markets across central London. In some cases, new historic lows have been reached, such as in Midtown and the fringe areas of London. As the usual summer slowdown and further caution continue, some of these quarterly may well dip below previous low points.