CBRE Says the West End Was the Stand-out Performer But There Were a Record Number of £100-Plus Rents Across London
A record 1.3 million square feet across 110 deals achieved a rent of £100 per square feet or higher in Central London in 2022, while West End office leasing was at its strongest since 2000, reported CBRE.
Across the whole London market, take-up for 2022 totalled 12.3 million square feet, 28% above 2021, the adviser added.
It saidthe best-quality buildings saw high levels of demand in 2022 with the vast majority of high-value deals taking place in the West End. Thirteen deals outside the West End achieved £100 per square feet-plus rent. Since CBRE’s records began in 1984, the £100 per square feet level has only been breached outside the West End on seven occasions.
West End take-up in 2022 was 4.9 million square feet, the highest annual total since 2000. The West End continues to outperform the other main markets, with fourth quarter take-up totalling 1.2 million square feet, 19% above average. A 155,000-square-foot transaction at the Earnshaw, WC1, led the strong activity.
London take-up has predominantly been driven by the banking and finance sector, accounting for 28% of deals in 2022, followed by the professional sector (17%) and creative industries (17%).
Rob Madden, executive director, head of London investor leasing and occupier brokerage, CBRE UK, said in the statement: “This data shows that there is still appetite for good-quality office space in London’s West End, even in the face of strong economic headwinds and the general move towards hybrid working.
“We have seen a number of buildings across the whole London market achieving record rents as occupiers seek the best space to attract their workforce, and, as we head in 2023, we expect demand for the best quality space to remain robust.”
Despite a slowdown in the fourth quarter, Central London investment volumes totalled £11.2 billion in 2022 of which 40% was in the West End. This figure is 12% higher than 2021.
Ed Bradley, executive director, head of Central London Office Investment Properties, CBRE UK said: “Despite the economic slowdown and 3.25% increase in base rates during 2022, the West End investment market saw £4.5 billion of transactions, with Mayfair and St James being among the most active sub-markets. In H1, record pricing was achieved in high-profile transactions such as 49 Park Lane, which sold for a 2.85% initial yield to a South American investor that invested in London for the first time. In H2, as the investment market slowed, the core market remained more resilient than other submarkets and trophy buildings continued to transact, such as Fenwicks on Bond Street to Lazari Investments for over £420 million.”