Demand appears stable, evidenced by above average take-up levels and reinforced by a summer of deal brokering, which saw more than 2m sq ft leased in July and August.
Given that London is experiencing a major shortage of quality new office stock, naysayers might conclude that vacancy is only falling because of constraints on new supply. So is there any hard evidence to show that demand is not only holding up, but going from strength to strength?
Financial services demand appears to surging but off a lower base than other sectors. The sector has accounted for 33% of demand in the year-to-date, compared to just 13% in the equivalent period in 2018. Much of this demand is like-for-like churn, with occupiers at best mirroring future space takes with current real estate obligations. Nevertheless, space is still being absorbed and not all of it is Grade A product.
But the real dynamo in the London economy remains the Media & Tech sector. During the past 12 months, the sector has seen its strongest net growth in the past 15 years.
The trendiest locations for tech occupiers - Shoreditch, Farringdon and Clerkenwell - are now at record pricing levels for City Fringe submarket. And even where tech occupiers have gone further afield, big lettings to BT, Sony, Google and Facebook have further taken up any potential slack.
London Media & Tech occupation grew 8% year-on-year, and we’re seeing new tech clusters emerge within large-scale developments such as Battersea Power Station (Apple) and White City (Publicis).
The message is clear, London’s occupier market remains in rude health, despite the continuing structural, political and technological changes that are ongoing. Even the Square Mile is benefitting from the positive vibes. Media & Tech occupation in the Square Mile has raced ahead of the City Fringe markets this year - surging to more than 5m sq ft for the first time.