Record Number Of New Entrants To London Office Market In 2021
Richard Coleman • 28/06/2022
The real estate services firm analysed 398 Central London leasing transactions over 5,000 sq ft – 8.6 million square feet in total – that took place across 2021, dissecting the data by a combination of metrics and categories including relocation type, submarket, business sector and size.
Its Movers & Shakers report shows the effect and aftermath of the pandemic, and the subsequent change in working patterns, did not deter new businesses from acquiring space in Central London last year. The 59 new market entrants – comprising both newly-established businesses as well as companies taking space in London for the first time – more than tripled 2020’s figure of 18 to record the largest volume since Cushman & Wakefield began tracking relocation trends in 2013.
Heena Gadhavi, from Cushman & Wakefield’s UK Office Insight team, said: “The previous record for new occupiers entering the Central London market was 52 set in 2017. That figure was recorded in a very different environment, reflected in the overall volume of space taken that year, 11.7 million square feet, being 36% higher than 2021. Given the uncertainty caused by the pandemic you might reasonably expect the country’s most expensive office markets to attract fewer new entrants, yet the opposite was true with a record number committing to space.”
At a market level, 28 of the new entrants took space in the West End, 29 in the City, and a further 2 in East London. From a sector perspective, media and technology companies accounted for the greatest number of new entrants with 17, followed by legal and professional services businesses with 13. In terms of size band, 25 of the 59 new entrants acquired more than 10,000 sq ft.
Across all 398 transactions last year, 176 occurred in the West End, compared with 222 in the City and East London. When looking at the ‘movers’ – with new entrants and expanding occupiers excluded – among these, the City market had the largest net migration number of +22 (104 moving into the market against 82 moving out), led by the City Core with +16 and +5 in both Southbank and Clerkenwell. In the West End, the net migration totalled +11, with 91 in-movers and 80 out-movers. This was led by positive net migration in Covent Garden (+6), White City (+4) and Victoria (+3).
Ben Cullen, Head of Offices UK at Cushman & Wakefield, said: “The City Core has excelled at attracting firms looking to relocate. There are a few reasons for this, chief among them the ‘flight to quality’ in the office market with developments and redevelopments in the heart of the city setting new standards for workplace environments that energise employees, promote wellbeing and have strong sustainability credentials.
“We expect the post-pandemic evolution of London’s office market to continue as occupiers focus upon easily accessible, high quality office space surrounded by vibrant amenities. The key will be about creating locations where talent wants to be.”
The average distance moved by occupiers was 0.96 miles in 2021, largely in line with both the pre-pandemic and overall 5-year averages. On average, the retail and leisure sector relocated the furthest (2 miles), with the sector’s struggles over recent years exacerbated by the pandemic resulting in retailers being prepared to move further and into different areas of London, seeking better value for money in terms of rents, size and grade of office space. Moving an average of 1.8 miles, government and public sector occupiers continue to be footloose and willing to relocate further afield from their previous office location. In contrast, insurance, banking, and finance firms remained closer to their previous location, moving just under half a mile in 2021.
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