City Leasing Market
Overview
The City office leasing market experienced a slight dip in activity during Q3 2024, with take-up levels reaching 1.17M sq ft. This represents a 17.8% decrease from the previous quarter and a 21.6% reduction compared to the same period in 2023. Despite this decline, the figure remains only marginally below the five-year quarterly average of 1.2M sq ft, indicating a relatively stable market.
Professional Services continued to dominate the occupier landscape, accounting for over 0.5M sq ft of take-up. The legal sector, in particular, maintained its strong presence within EC3, with new record rents being achieved within the submarket. Notable transactions include Akin Gump Strauss Hauer & Feld LLP securing 76,822 sq ft at 155 Bishopsgate, EC2, further solidifying the City's position as a hub for law firms. Additionally, Legal & General pre-let 179,317 sq ft at Woolgate, Basinghall Street, EC2, a BREEAM "Excellent" rated office set for completion in 2027.
The Banking & Finance sector emerged as the second most active, with approximately 230,000 sq ft of take-up most noticeably from Industrial and Commercial Bank of China (ICBC) who regeared 120,000 sq ft at 30 Gresham Street, EC2.
Availability in the City showed signs of tightening, reaching 11.76M sq ft in Q3 2024. This represents a 2.4% reduction compared to Q2 levels and a 6.0% decrease from the same period in 2023. Consequently, the vacancy rate fell from 12.2% to 11.82%, now sitting below the ten-year average of 11.91%.
Prime rental rates in the City continued their upward trajectory, reaching £82.50 per sq ft, marking a substantial 13.8% annual increase. Premium rates held steady at £110 per sq ft, reflecting an impressive 15.8% year-on-year growth, although exceptional figures are now being discussed for top floor tower space with rumours of £120 per sq ft plus.
The shortage of high-quality space remains acute, with Grade A vacancy at just 2.11% across the City and an even tighter 1.16% in the City Core. This scarcity of prime stock continues to drive the flight to quality among occupiers and supports the robust rental growth observed in the market.
Development Pipeline
The development pipeline remains robust, with approximately 3.14M sq ft currently under construction and scheduled for completion by the end of 2024. Q3 witnessed the completion of 1.99 M sq ft of office space, helping to address the scarcity of Grade A accommodation. A notable addition to the market was British Land's Blossom Yard & Studios in Shoreditch, delivering around 130,000 sq ft of newly refurbished, net-zero office stock, following the preletting of 115,000 sq ft within the development to Reed Smith.
10 Old Bailey, EC4
The Amp, E1
15 Bonhill, EC2
Blossom Yard, Norton Folgate
Wenlock Works, N1
Headline Market Deals
Key completions in Q3 2024 were Akin Gump Strauss Hauer & Feld LLP securing 76,822 sq ft at 155 Bishopsgate, EC2, Legal & General pre-let 179,317 sq ft at Woolgate, Basinghall Street, EC2, Travellers taking 33,723 sq ft at 30 Fenchurch Street, EC3, and PayUK acquiring 27,000 sq ft at The Whitechapel Building, E1.
Allsop Transactions
The City leasing team continued a run of success into Q3 2024. Key completions have been:
- De Montford University signing a new lease of 18,459 sq ft at LaSalle Investment Management’s The Amp, E1
- Checkout signing a new lease of 11,774 sq ft at Schroders’ Wenlock Works, N1
- The team leasing 10,428 sq ft to Dehns at Longmead’s 10 Old Bailey, EC4
- Couple of Keys signing a new lease of 8,750 sq ft at Urban and Urban Properties Ltd’s Colour House, N1.
- Unity signing a new lease of 7,000 sq ft at Resolution Property’s Moretown, E1
- ITRS Group Ltd signing a new lease of 6,590 sq ft at 15 Bonhill, EC2
- Versus Arthritis signing a new lease of 6,333 sq ft at 120 Aldersgate, EC1