Take-up in Central London totalled 3.24 million sq ft in Q2 bringing total take up for the first half of the year to 6.10m sq ft. Over the last 12 months, we have witnessed take-up levels consistently increasing. A major factor influencing this is the pent-up demand resulting from the pandemic and various lockdowns. Activity is predominately focused on best in class Grade A product, which is leading to a large amount of pre-let activity. Whether this level of take up can be sustained is yet to be confirmed.
Across Central London, Professional Services have occupied the majority of the market at 29% driven predominantly by the legal sector. Key deals in this sector include: Kirkland & Ellis acquiring c.305,000 sq ft and Chubb c.114,000 sq ft both at 40 Leadenhall Street and HFW’s procurement of c.60,000 sq ft at 6 Bishopsgate. Banking & Finance and Media Tech accounted for 17% and 14% respectively. Capital Group pre-let c,220,000 sq ft at Paddington Square, a significant transaction in the Banking & Finance sector.
Supply increased by 2% from Q1 to 19.56 million sq ft. In the City, The Featherstone Building completed which brought 124,200 sq ft of office space to this market. So far this year across Central London, 2.04m sq ft of new construction has completed, 48% of which is pre-let.
Flight to quality is becoming an increasing consideration for occupiers who are not only keen to attract top talent but also entice their current workforce back to the workplace. Accommodation that fulfils ESG requirements and is rich in both amenity and design continue to attract strong occupational demand.
We are beginning to see a change in how office space is being utilised. Traditionally, approx. 65% of space would be dedicated to desks. Now it is anticipated that only 45% will be used for desks and the additional space being used for informal meeting areas, social space, etc. Obviously this varies by occupier and sector, but appears to be a consistent theme this quarter.