City Leasing
Overview
The City office market continued to show resilience in Q2 2024, with leasing activity rising by 16% quarter-on-quarter. This uptick was largely driven by Citadel's 252,000 sq ft landmark pre-letting at British Land and GIC's 2 Finsbury Avenue, EC2, representing a significant vote of confidence in the City.
Grade A space accounted for 80% of take-up during Q2, with the financial services and technology sectors generating over half of leasing activity. Insurance companies and flexible office providers accounted for another 20%.
Despite the uptick in demand, the City's oversupply of secondary space led to a rise in the all-grade vacancy rate to 12.2% in Q2 2024, matching the highest level since the 2007/8 Global Financial Crisis. This secondary space comprises 85% of available supply, in contrast to new/refurbished space at just 1.8% vacancy. Major schemes including 22 Bishopsgate, EC2, 8 Bishopsgate, EC2, and 40 Leadenhall, EC3 are approaching full occupancy.
The City's development pipeline continues to show tight supply over the next 3 years, with 1.2M sq ft either pre-leased or under offer year-to-date in 2024. Average annual speculative completions in the City core have declined from 1.2M sq ft in 2005-2014 to under 600,000 sq ft in 2015-2024, putting pressure on near-term supply. Looking further ahead beyond 2 years, pipeline is more promising. 3.2M sq ft of planning has been approved with a further for 3.7M sq ft of applications being submitted for delivery in 2027 and 2028. These projects will provide a much needed boost to supply and occupier choice with current constraints over the next 12 months.
Top rents in the City have continued to be driven by the lack of 'best in class’ space. Lettings at 8 and 22 Bishopsgate, London EC2, have been at the forefront consistently achieving over £110 per sq ft for the upper floors. Allsop are acting for CLI Dartiver on the newly completed Folgate Building, which is now quoting £105 psf on the top terraced floors.
22 Bishopsgate, EC2
40 Leadenhall, EC3
8 Bishopsgate, EC2
Headline Market Deals
Key completions in Q2 2024 were Citadel taking 252,000 sq. ft at 2 Finsbury Avenue, EC2, Amazon expanding into 107,000 sq ft at The Bard, EC2 and a further 70,000 at The Hewett, EC2, Sompo acquiring 75,000 sq ft at 40 Leadenhall, EC3, and Invesco taking 41,000 sq ft at 60 London Wall, EC2.
Allsop Transactions
The City leasing team continued a run of success into Q2 2024Key completions have been acquiring 10,500 sq ft on behalf of the up and coming BeZero Carbon at 25 Christopher Street, EC2, USS signing a new lease of 6,250 sq ft at Columbia Threadneedle’s 62 Threadneedle Street, EC3, leasing the whole of British Land’s 37 Sun Street, EC2 to Bank of Africa as a 5,000 sq ft self-contained building, and Black Sheep Coffee taking 4,000 sq ft at 56-58 Southwark Street, SE1.
62 Threadneedle Street, EC3
37 Sun Street, EC2