Central London Office Market Update Q2 2020
Our Central London Office Market Update Q2 2020 has just been released.
Key findings include;
- The first real signs of a wait and see approach being adopted by occupiers during lockdown was reflected in subdued activity in Q2 2020. Central London take-up in the second quarter of the year reached 1.2m sq ft, 61% down on Q2 2019 (3.0m sq ft) and well below the long term quarterly average of 3.2m sq ft. This brings H1 2020 take-up to 4.0m sq ft, 34% below the same period last year (5.9m sq ft) and 37% below the long term average for take-up in the first two quarters.
- The largest deal to complete this quarter was to BP signing a 15 year lease across the ground, 1st to 8th floors (205,000 sq ft) at Cargo, 25 North Colonnade, E14 which provided a significant boost to take-up figures. Another notable deal was at TwentyTwo, 22 Bishopsgate, EC2 where Covington and Burling signed a 15 year lease across the 51st to 54th floors (85,768 sq ft).
- Q2 2020 investment volumes reached £760m in Central London which boosted by a strong Q1 brings H1 volumes to £4.9bn, 13% below H1 2019 levels (£5.6bn).
- The lack of transactional activity can be attributed to several factors; most obviously are the impacts of the ongoing travel restrictions and building viewings but more so a mismatch in seller and buyer pricing expectations. This has further exacerbated the already supply starved market. However, we believe pricing is showing tentative signs of solidifying. Indeed, in the largest transaction of Q2, Tenacity Group purchased 20 Farringdon Street, EC4 for £120m reflecting a NIY of 4.58%. Another notable transaction was to Mighty Divine who purchased 10 Fenchurch Street, EC2 for £95m reflecting a 4.07% NIY.