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Leasing transactions in the City reached 1.46m sq ft in Q1, down by 11% q/q but up 99% when compared to Q1 2021. The City Core market accounted for 68.5% (1m sq ft) of overall City take-up.
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Aviva took 80,000 sq ft at 80 Fenchurch Street on a 10 year deal which is due to commence in June 2022. Spectron Services Ltd. subleased 18,648 sq ft at 155 Bishopsgate on a 4 year term. The landlord was represented by BNP Paribas Real Estate.
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The vacancy rate in Q1 stood at 10.6% overall, however Grade A vacancy was significantly lower at 4.9%. In addition, we consider supply for "best in class" buildings with strong ESG and sustainability credentials to be even tighter with a vacancy rate of 2.9%. The flight to quality and this low vacancy rate are driving rental growth in the City with rents of £85.00 per sq ft having been achieved on pre-lets for the best buildings. With ESG and sustainability policies at the forefront of decision making, developers and investors alike are focused on this sector in order to capitalise on the demand for superior space.
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Supply in the City increased by 5% to 9.1m sq ft, which can be attributed to The Bard and The Rowe which have added c.437,000 sq ft to the City office market. This equates to an overall vacancy rate of 10.6%, which remains above the ten-year quarterly average of 7.4%.