Central London MarketBeat Quarterly Report

Annual investment volumes for Central London offices reached £5.89 billion at the end of Q3 2024, 6% down on Q2 and the lowest annualised figure on record – below the previous minimum set in Q1 2024. Despite this, optimism around the interest rates outlook and the strength of the occupational market, including the significant rental growth picture and high levels of active demand, suggests activity is likely to pick up. 
In the leasing market, in Q3 2024, 2.56 million sq ft of take-up was recorded across Central London – up 21% quarter-on-quarter and 1% above the ten-year quarterly average of 2.55 million sq ft. Grade A leasing continues to dominate activity, amounting to 1.80 million sq ft equating to 70% of Q3 take-up – well-above the ten-year average of 59%. Grade A activity in the quarter was also 4% ahead of the pre-Covid five-year quarterly average from 2015-29.
 
Across Q1-3 2024, take-up was marginally behind the same period in 2023. Grade A stock has continued to see good demand, with 2.42 million sq ft of Grade A space under offer at the close of Q3 – up 1% on the quarter and 24% above the ten-year average.

This robust demand, together with a tight development pipeline and record high levels of active demand (c. 13 million sq ft), fuel a positive rental growth story. In the City, average annual rental growth of 4.4% is forecast for prime assets in the next five years versus 7.6% for super-prime assets; whilst in the West End, figures of 4.0% and 7.3% are forecast, respectively.