London Grade A offices availability as a percentage of overall marketed vacancy, has ticked up marginally over the past six months. In the City of London, in particular, where transaction levels have failed to keep track with the bounce seen in other London submarkets, delivery of new speculative Grade A reached a three year high in 2020, despite the impact of the pandemic. 2018-2019 combined, saw just over 1 million sq ft of new speculative space brought to market in the City but in 2021 to date, that figure has already been exceeded.
The West End market continues to see supply shortages for Grade A space. Just 6,000 ft of brand new spec space has been delivered in 2021 to date, to add to just 81,000 sq ft (2020) and 74,000 sq ft (2019).
While Grade A availability represented 50% of availability in 2014, that number stands at half that (25%) in 2021. Competition for premium space in the West End, including the best quality second-hand, is intensifying and set to not just bolster headline rents but provide ample evidence of uplift over the next 12-18 months.
While super performing tech giants such as TikTok and Snapchat have made, and are in the process of making, significant long-term commitments to expansion space in London, others such as Babylon Health are taking a wait-and-see attitude, opting for shorter term sublease space on 2-3 years terms. Others such as law firms, Hogan Lovells and Addleshaw Goddard and biotech company Lab Genius continue to explore stay-or-go strategies.