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Death of the office? Don’t tell City businesses as leases shoot up in the first quarter

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London’s office market looks fitter and healthier than ever before, according to the two of the UK’s largest property firms, despite the lures of working from home.

Take up of office leases in central London shot up 89 per cent year-on-year in the first quarter, CBRE data shared exclusively with City PM revealed. 

City firms to bet on the office return include law firm Hogan Lovells, which pre-let the largest space in the period, with 280,000 sq ft at 21 Holborn Viaduct, EC1. 

There was a particular uptick in smaller deals typically seen before Covid, CBRE’s head of London office brokerage, Rob Madden, said.

A total of 1.7m sq ft of deals under 20,000 sq ft were signed across 351 individual transactions. This was just over a third more than transacted in any other quarter since Covid hit.

Office space under offer in the heart of the capital totalled 3.9m sq ft, above a 10-year average of 3.3m sq ft.

Meanwhile, London-headquartered Savills has reported office demand topping a five-year high.

Nearly a third of office occupiers are increasing the amount of space they are after, data from Savills found, as businesses look to scale their headcount and operations post-pandemic. 

The majority (41 per cent) of central London occupiers are looking to double the amount of space they currently occupy – which is around 10,000 sq ft.

“We continue to see a rise of inward movers into London’s rapidly emerging new office districts,” said Jon Gardiner, head of central London office leasing at Savills, citing Swiss pharmaceutical giant Novartis relocating to new offices at White City from the Thames Valley in 2020.

“These companies see London as a key tool in the war for talent,” Gardiner explained. “They are looking for amenity rich, well connected urban campuses.”

While the battle for top-talent shows no signs of slowing, London commercial property analyst at Savills, Victoria Bajela, suggested that the spiralling cost-of-living crisis could see occupiers opt for smaller but better-quality spaces – though this is a trend that is yet to appear.