Lack of stock means London occupiers having to look up to four years in advance for new space.
A total of 70 per cent of West End office space currently under construction is already pre-let according to new research from Colliers International. Across London there continues to be supply constraints as development space is snapped up before completion and occupiers must plan several years ahead of their lease events to secure new space.
Colliers notes that in 2020, across the whole of London, 8 million sq ft of office space is set to complete, however 5.7 million sq ft is already pre-let or under offer. Not only this, but a further 815,000 sq ft is pre-let or under offer for 2021.
Guy Grantham, research director at Colliers International, commented: “It is no secret that the West End is suffering from a chronic lack of space, and the fact that space is being removed from the market over a year in advance is evidence of this. The trend continues from 2019 when across London occupiers absorbed 92 per cent of completed space in schemes of over 50,000 sq ft prior to completion.”
During this development cycle (2015-2019), on schemes of over 50,000 sq ft, Colliers’ research shows that in 2016, 83 per cent of development space across London was vacant upon completion but by 2019 this had dropped to just eight per cent. Looking ahead, 50 per cent of space scheduled for 2020 – 2021 is no longer available.
Tom Wildash, co-head of West End leasing at Colliers International, added: “As the reduction in London space continues, occupiers of scale are having to look up to four years ahead of lease events. The issue developers are facing is finding the viable locations to create new office space and there will now have to be a real focus on increasing the pipeline alongside high quality refurbishments.”