City Leasing

The development pipeline and the lack of new Grade A stock entering the market until 2026 continues to be the main talking point with companies now having to commit years in advance to secure space with large floorplates. With c.950,000 sq ft to be delivered over the course of 2024, less than a third of this accommodation is new-build space. Kirland and Ellis, Ark Insurance, McGill and Partners, Chubb and Shawbrook Bank have secured space early and committed to 40 Leadenhall, which is a prime example of a major 750,000 sq ft scheme pre-let ahead of completion due in Q1 2025. This trend has continued and forced occupiers to be more proactive, with major firms such as Legal & General committing to 190,000 sq ft in Stanhopes’ Woolgate Exchange, EC2, Moody’s to 120,000 sq ft in 10 Gresham Street, EC2, Citadel to 250,000 sq ft in British Land’s 2 Finsbury Avenue, EC2, Broadgate and Gallagher shortlisting options to take 175,000 sq ft including One Exchange Square, EC2 and 75 London Wall, EC2 amongst others. Future development pipeline includes c.13M sq ft delivering over the next five years, however, much of this is either already pre-let, under offer or delayed. A direct result of rising construction costs, skilled labour shortages and uncertainty over interest rates will leave a shortage of new larger developments of Grade A space from 2025 through to 2028. Wise signing at Worship Square, EC2 was the only pre-let deal in Q1 2024 where they secured 85,000 sq ft. This in turn meant that Q1 2024 had the lowest level of pre-letting activity since Q4 2020.

The lack of supply for ‘Best in Class’ product has led to an increase in prime rents where the City has witnessed an increase to £85.00 per sq ft, with towers now consistently achieving over £105 per sq ft.