South East office take-up reaches five-year peak

Office take-up across the South East and Greater London markets in 2024 was the highest in five years, according to the latest figures from Knight Frank. Leasing volumes totalled 3.6m sq ft last year, up by 5% on 2023. Demand was almost exclusively concentrated within new, grade-A office buildings, said Knight Frank, accounting for 80% of all space taken over the 12 month period. Johnson & Johnson’s 97,488 sq ft pre-let at Maidenhead’s Tempo development was the largest letting deal in the region last year. The final quarter of the year saw 888,049 sq ft of space transacted across 115 deals, including pharmaceutical giant Novo Nordisk’s 61,020 sq ft letting at Oxford’s Iversen Building. Around 60% of deals done in 2024 were completed in town centre locations where supply of best-in-class space is most constrained. Oxford was the busiest market overall, with 572,500 sq ft of take up, representing a 12% increase on 2023 levels. Reading was the second busiest, recording 503,000 sq ft of leasing activity, up by 13% year-on-year. The largest year-on-year increase was in West London, where annual take up rose by 159% to 458,500 sq ft, underpinned by deals including the Imperial College of Science’s leasing of 47,650 sq ft sq ft at White City Place. According to Knight Frank figures, there is 1.6m sq ft of speculative office space under construction across the South East and Greater London markets with delivery dates over the next three years. Some 60% of this space – equating to 900,000 sq ft – is due for delivery in 2025. Demand significantly outweighs supply with Knight Frank tracking some 4.9m sq ft of active office requirements and 13.2m sq ft of lease expiries over the next three years. Roddy Abram, head of South East & Greater London offices at Knight Frank, said: “All landmark letting transactions, above 50,000 sq ft, recorded in 2024 were for space in new developments or comprehensively refurbished grade-A buildings. The year witnessed 18 lettings in buildings still under construction, the highest annual figure since our records began, reinforcing that prime, best-in-class space remains highly sought after given that supply isn’t keeping pace with lease events. “Office-first work policies are already the norm for businesses of all sizes and this is translating to companies upgrading corporate headquarters.”  Investment transactions across the region were also well up on 2023, totalling some £1.6bn – a 25% rise on the previous year. Just less than £650m of assets were traded in the final quarter, a 154% increase on the previous three months, and the highest quarterly total for two years. Cambridge witnessed the highest volume of deals out of all the markets, with a total of £192m, including owner-occupier Danaher’s £125m acquisition of Cambridge Biomedical Campus from Tesco Pension Fund. Danaher’s wholly owned company Abcam occupies the building. Prime yields remained stable at 7% in 2024, with the weighted average net initial yield of 8.9% across all transactions. Simon Rickards, Knight Frank head of national offices capital markets, said: “The narrowing gap between buyer and seller expectations should translate to more assets being brough to the market and a subsequent increase in liquidity from institutional investors. “Private capital will remain active to capitalise on a comparatively less competitive buyers’ market, with dollar-based investors enjoying a strong currency advantage against a weaker pound.”   Photo © SevenStorm JUHASZIMRUS/Pexels