Central London Office Market Update Q1 2021
Central London leasing activity saw a 29% increase on the previous quarter for the first time, recording the highest level of take-up since the beginning of the pandemic. In Q1 2021, take-up reached 1.2m sq ft, this remains well below the long term pre-pandemic average of 3.1m sq ft and 55% down on the same period last year (2.8m sq ft). 2020 pent up demand may provide a boost to 2021 take-up levels in the months ahead leading to increased leasing activity.
The largest deal of the quarter was Latham & Watkins 200,000 sq ft pre-let at 1 Leadenhall Street, EC3 on a 15 year lease when the building reaches completion in 2026. Largely boosted by this deal, bias for Grade A space continues into 2021 with newly built and refurbished space accounting for 45% of take-up across Central London, up from 35% in Q4 2020.
Despite a strong end to 2020, activity in the investment market was subdued in Q1 2021 as a result of persistent stock shortage in Central London. The first quarter saw investment volumes reach £1.9bn across 28 transactions recording a year-on-year decline of 55% and 50% down on the long term average for the Q1 levels (£3.8bn).
Office transactions >£100m were a major driver of Q1 investment volumes with four transactions recorded on par with Q4 2020. Wing Tai Properties Group’s £255m acquisition of 66 Shoe Lane, EC4, Aberdeen Standard's £160m transaction at Friars Bridge Court, 45 Blackfriars Road, SE1 and Fidelidade’s £158m purchase of 25-27 St James’s Street were the three largest transactions of the quarter.