Overall London Office Vacancy

Overall London Office Vacancy Dips to 10%

UNITED KINGDOM – The latest figures from real estate consultancy Colliers shows that the overall office vacancy level in London has slid to 10 percent currently from the peak of 11 percent during the last quarter 2022. However, the office vacancy rate in the capital is greatly above the 10-year average of 6.4 percent, reported Property Week on Wednesday (22 November, SGT).

Nonetheless, looking at the particular shows that London’s office market is not really languishing, with some types of office properties seeing robust demand, with some achieving record-breaking office rents.

For instance, the vacancy level of newly completed Grade A office buildings in London’s core area is very low at just 1.6 percent.

This comes amidst solid take up of superb quality office space, with demand surging following the COVID-19 pandemic. This shows that office tenants now have a sharper focus on office buildings with high quality specifications, located close to transport hubs, comes with many amenities, and those that are considered as net zero carbon.

Aside from that, the supply of excellent quality office properties remains at near-historic lows, especially in core submarkets. This means that the prime end of the office sector in London is seeing office rental gains, while lower quality office buildings (Grade B or lower), are witnessing a fall in office rents.

Furthermore, another thing that would spur the demand for superb quality office buildings, particularly those with green credentials, is the government’s upcoming enforcement of the Energy Performance Certificate (EPC) ‘B’ target for privately leased office buildings by 2030. This will result in a divergent demand: office towers with eco-friendly ratings that meet the EPC standard will see higher demand, while ‘brown buildings’ that don’t comply with the standard would languish in the office rental market.

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