Down to the Waterline: Southbank reaps rewards

A  flurry of office lettings has shone a spotlight on London’s Southbank as it nears record rents and attracts big names to set up shop in the submarket. Recently announced deals at LBS Properties and Barings’ Tide Bankside and Fore Partnership’s TBC.London were signed in the mid to high £90s per sq ft. The latter, which will see Spanish fintech Allfunds move from the West End to the Southbank for an average rent of £98.50 per sq ft, came within a whisker of the submarket record of £99 per sq ft set last year, according to Savills’ Central London Office Market Watch. Basil Demeroutis, managing partner at Fore Partnership, put this down to changing occupier priorities and increasingly footloose tenants becoming desensitised to high rents after seeing them in other markets. “The things that we value have dramatically changed,” said Demeroutis. “Like being connected to nature and the river, access to proper outdoor space, being located in the heart of a vibrant community, connected to one another as much as to place. Southwark has these things in abundance, and it’s not a surprise it is seeing such an influx of corporate occupiers. “We find occupiers increasingly focused on finding authentic, quality, low-carbon spaces, and less fixated about where. So long as the basics are right – transport, local amenities, for example. But these have become table stakes.” New names Alongside Allfunds, fit-out company Workplace Futures Group is jumping ship from the West End, where it is currently based at 10 Greencoat Place. The company has agreed to take the top two floors of LBS and Barings’ 12-storey Tide development, where it will pay around £95 per sq ft on average across the 18,686 sq ft lease. Tide also recently welcomed Flight Centre, a travel agency based on the fourth floor of 120 The Broadway in Wimbledon, which has agreed to take the development’s roughly 14,000 sq ft seventh floor. Lego, the children’s toy maker, is under offer to move from its offices at 8-10 New Fetter Lane and 1 Plough Place, both in Midtown, to take nearly 200,000 sq ft at Stanhope’s 76 Southbank. There it will join global fintech PayPal, which is set to take the top floor of the six-storey former IBM building when it moves from Whittaker House in Richmond. “Until recently, demand and take-up has been dominated by existing occupiers,” said Ann Ibrahim, head of research at specialist Southbank agency USP.London. “However, we are starting to experience increased activity from external occupiers – PayPal and Allfunds – being attracted to the market owing to its exceptional amenity, quality transport links and the delivery of high-quality assets currently under construction in the Southbank.” Take-up for the year was running around the 134,000 sq ft five-year Q1 average for Q1, at 130,000 sq ft by mid-March. There was then a further 414,000 sq ft of space under offer over the quarter, according to research by USP.London. That was up from 205,000 sq ft in the final quarter of 2024, largely due to Lego’s sizeable deal. “While there are still macro-economic and geopolitical challenges that will impact on demand, we believe there is a drive from occupiers to secure high-quality space which the Southbank has and will continue to deliver,” said Ben Fisher, managing partner at USP.London. He added: “These schemes have moved the rental dial and will continue to transform the submarket. We are feeling cautiously optimistic about the Southbank’s prospects this year and it will be interesting to see how the buildings of scale fair in this marketplace.” Feasibility questions With a further 1.25m sq ft currently under construction and available across 11 schemes, the submarket has space to offer. For larger occupiers, there are six schemes which offer over 100,000 sq ft of space, including: Edge’s 27-storey Edge London Bridge on St Thomas Street, which will offer 275,500 sq ft when it completes in Q3 next year; JTRE’s part-21-storey, part-15 storey mixed-use block at 220 Blackfriars Road, which will offer 210,000 sq ft; and Landsec’s The Ink and The Print Building at Timber Square at 25 Lavington Street, which will together offer 365,000 sq ft. Yet with projected structural demand in the submarket expected to amount to 2.8m sq ft between 2025 and 2029, according to Knight Frank’s The London Series report, rents are nonetheless expected to grow – by around 3.7% year-on-year over the next five years, according to Savills. “The Southbank has really grown in popularity in recent years, and occupiers now expect to pay a premium on prime space in the district – especially near the river,” said Josh Lamb, director in the Central London office leasing at Savills. He added the caveat, however, that there is a lack of clarity around some Southbank sites’ feasibility, which could be off-putting to occupiers considering a move to the increasingly competitive submarket. These could include sites such as those Estates Gazette identified as being lined up for sale by Landsec, after it announced its pivot from offices and retail towards building out a residential portfolio – namely, the riverside Red Lion Court, which would deliver 230,000 sq ft of space; 22-24 Southwark Bridge Road, which would provide another nearly 200,000 sq ft of office space; and The Liberty of Southwark at 15 Southwark Street, which has approval for a 160,000 sq ft mixed-use office, retail and residential development. “There is a strong pipeline of stock but with feasibility still in question, some occupiers will look to certainty of delivery and head further east to the likes of [British Land’s] Canada Water. It has good connectivity with the Jubilee Line and Overground services, and occupiers are finding they can get a lot of space for their money,” added Lamb.