According to research from DeVono Cresa, the second quarter of 2020 saw 1.2 million sq. ft of office space leased across central London – a drop of 57 percent on the previous quarter. With the market feeling the full effects of the COVID-19 lockdown, demand, availability and rents in central London all trended as predicted, but with the pace somewhat subdued. Q1 2009, at the time of the Global Financial Crisis (921,000 sq. ft leased), remains the lowest quarter of take-up.
Total office space leased for the first half (H1) of 2020 was 3.9 million sq. ft, down 43 percent on H1 2019. The average deal size in Q2 2020 however was 8,160 sq. ft, in comparison with 5,785 sq. ft in Q1 2020.
Office availability in Q2 rose by only 8 percent, with 14.9 million sq. ft available across central London since the beginning of Q2 2020. The greatest rise in office availability over the past quarter was in the West End up 15 percent (3.3 million sq. ft), which is now back at the same level as Q4 2019. In the City, office availability levels increased by 8 percent (5.3 million sq. ft) taking the volume above 5 million sq. ft for the first time since Q2 2019.
“Our data from Q2 2020 has shown that demand for office space has not disappeared, and with a number of deals already signed in July, businesses continue to commit to future office space and look for opportunities in the market,” said Shaun Dawson, Head of Insights at DC.
“As a result of the ongoing pandemic, we expect demand for leasehold space to remain subdued compared with historical levels mixed with an increased appreciation of flexible office space,” Dawson added. “This will, in turn, lead to a further increase of available office space across central London. What we are seeing, and in a very short period of time, is the balance of power in property negotiations, which is generally cyclically, is swinging back to the tenant,” he adds.