Office occupiers commit to London as take-up for year to date rises 23% on 2016

26 July 2017

According to Savills research, office take-up in Central London in the first half of 2017 has reached 5.5 million sq ft (510,950 sq m), marking a 23% increase on the same point last year (4.5 million sq ft/ 430,500 sq m) and the 10-year average (also 4.5 million sq ft/ 430,500 sq m).

Savills says take-up has increased in both London’s City and West End markets driven by ongoing strong demand from tech and media (24% market share in the City, 25% in West End), insurance and financial (13% market share in both the City and West End) and with strong take-up from serviced office operators (8% market share in the City, 27% in West End). In the City, take-up was also driven by the professional services sector which accounted for 16% of activity, according to the firm.

This increased activity sees 36% of the City’s development pipeline for 2017 – 2020 already pre-let, says the firm, and 29% for the West End market. Overall, at the end of H1 2017, 11.8 million sq ft (1.09 million sq m) of space remains available across Central London according to the research, equating to a vacancy rate of 4.8%. For comparison, Savills 10-year vacancy rate average currently stands at 5.8%.

Stuart Lawson, director in the City leasing team at Savills, comments: “The first half of 2017 has been notably strong as occupiers remain committed to Central London and acquire new office accommodation in order to support ongoing long term business. Whilst the events of the last year have made some occupiers pause for thought, the statistics indicate resilient take-up across all size sectors, which is promising. Looking ahead to the second half of 2017, accommodation currently under offer is also strong, standing at 2.9 million sq ft, which is also ahead of the long term average.”

Savills says activity has seen average prime rents in the West End rise to stand at £118.23 per sq ft, 7% above 2016’s average prime rent. The firm highlights that the top rent achieved in 2017 so far is a record £190 per sq ft (£2,045 per sq m), up on the £150 per sq ft (£1,615 per sq m)achieved last year, highlighting how occupiers in Central London continue to pay premium rents for the best space. In the City, average prime rents currently stand at £74.46 per sq ft (£801 per sq m), down 4% on last year, which Savills attributes to the current lack of available tower floors that tend to achieve premium rents.

Key H1 2017 deals include: Hearst UK acquiring floors 2-6 at LSQ, WC2 totalling 70,915 sq ft; London Executive Offices’ (LEO) third acquisition of 2017 with a deal agreed across floors 1, 2 and 5 at 20 North Audley Street, W1 totalling 31,520 sq ft; Industrial Light & Magic acquiring 47,010 sq ft at Lacon House, Theobalds Road, WC1; and Freshfields, Bruckhaus Deringer LLP agreeing to lease 288,000 sq ft at 100 Bishopsgate, EC2.


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