It’s hard to believe how quickly the time has flown since our last update. Happily, it’s been a busy year for us as we’ve focused on a number of exciting new projects and developments – not the least of which was the opening of a new London branch!, this time on the East side of London. Given our own recent move, we thought this would be the perfect opportunity to share with you some insights on the London commercial office market.
London is a city constantly in transition, always evolving to accommodate the millions of people who live and work there. As one of the most in-demand markets in the world, London faces an ongoing battle for space, and demand often outstrips supply. There are signs, however, that the office market in Central London may be picking up pace – which means more businesses could be positioned to move to new or expanded facilities.
According to a market analysis conducted by Estates Gazette for the second fiscal quarter of 2014, speculative new builds are on the rise, after a slow start to the year. While there is still a significant gap in take-up, the prospects for the rest of 2014 are encouraging.
Two new-builds of note were a speculative redevelopment of 324,000 square feet at 1 New Street Square, EC4 Midtown, and a 135,000 square foot quadrant in the West End. Surprisingly, despite only having about half the availability, the West End’s growth numbers in terms of increased take-up matched those of the City Core, which had no new build-outs for Q2. Boosting the result for the West End to its highest level in four years was the signing of a pre-let for 140,000 square feet of space at 1 Fitzroy Place, W1 – one of the biggest deals in W1 history.
The recovery in commercial property market is a function of increased investment and strong leasing demand, according to British Land, one of the UK’s largest real estate firms, which recently completed a £26m sale of office property in Soho to Amazon. Further contributing to the strong growth was the suggestion in early August from the Bank of England that interest rates would remain lower for longer. Borrowing investment capital cheaply, then receiving the stable rental income London offers, means developers are better able to speculatively build out new commercial properties – potentially easing the demand crunch.
New builds aren’t the only story, however. In Q2, second-hand space accounted for nearly two-thirds of letting activity, according to the Estates Gazette study. With new property at a premium, commercial office occupiers appear to be more willing to forego customised bespoke facilities in exchange for more modest accommodations in spaces that were built out for previous tenants. There may be a psychological component here as well – as the impact of the recession lingers, companies may be wary of seeming too flash or quick to overlook value for money.
Whether new or secondhand, and regardless of postcode, there’s no doubting the likelihood of increased activity in office moves. And if you’re a Facilities Manager or Office Manager responsible for commercial offices, it’s possible you may be tasked with coordinating a move in the not-too-distant future.
That’s where we come in, of course. At Johnsons Business Moves, we’ve helped a number of big companies move in and out of offices in London. We provide the ultimate relocation service, whether you need a one-off removal or a complete contract management service.
If your company is considering a move to or within London, please do get in touch and one of our team will be happy to discuss how Johnsons can help you. Email us at [email protected] or call our London office direct on 0208 2262144.