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Q2 leasing transactions in the City reached 1.57m sq ft, which was up 11% from the previous quarter. The City Core market accounted for 75% of overall City take-up, equating to 1.18m sq ft.
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There were two significant transactions at 40 Leadenhall Street. Kirkland & Ellis acquired c.305,000 sq ft and Chubb acquired c.114,000 sq ft. Another standout deal was HFW's acquisition of c.60,000 at 6-8 Bishopsgate.
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The Professional Services sector accounted for 50% of total take-up during the course of Q2. This takes their proportion of total take-up in the City market this year to 43%, demonstrating they are currently the most active sector in this market. As a comparison, Media Tech accounted for 14% during the course of Q2 and 15% so far this year, slightly below the 5 year average of 17% for this sector.
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Supply in the City increased by 5.2% to 9.1m sq ft, equating to an overall vacancy rate of 10.8%, which remains above the ten-year quarterly average of 7.4%. However, supply of Grade A space remains tight, with the vacancy rate contracting to 5.25% and accommodation that is deemed 'best in class' to 2.9%.
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Occupational demand continues to be focused on new or well-refurbished buildings that are rich in design and amenity and that satisfy all ESG requirements. This has helped maintain prime rents in the City Core at £72.50 per sq ft, despite some concerning economic and political headwinds.