With lockdown officially over, the City of London is kicking back into gear.
During the first half of 2021, activity in the City leasing market was slow and steady. In fact, the government’s decision to extend lockdown regulations until 19 July led some businesses to delay the exchange of leases until restrictions were at an end. Now, as many big-name businesses announce plans for full or part-time return to the office, demand for City office space is on the rise. In recent weeks, the back-to-school atmosphere has remained strong, with tens of thousands of commuters pouring back into central London, and mid-September seeing the busiest morning rush-hour since the pandemic hit.
In the City, the middle of the working week has become a hive of activity; workers are increasingly expected to commute in for face-to-face meetings. Returning to the office also offers employees the chance to mix, collaborate and socialise with colleagues. Certainly, the City’s bars and restaurants – which have stood eerily quiet for more than a year – are now noticeably busier than normal, so much so that restaurants such as 1 Lombard, The Ivy and Fortnum’s Royal Exchange are all fully booked mid-week be it for breakfast or lunch!
This uptick in activity is reflected in Allsop’s viewings and demand tracker for the City leasing market. Since the government’s announcement in February regarding the wind down of Covid restrictions, Allsop’s City team has averaged more than 17 viewings per week and over 84 City Agents Society enquiries. Data from Q2 demonstrated the pick-up in both viewings and enquiries across the City leasing market. In May 2021, there was an average of 11.2 viewings per week – up from 7.2 in 2020. By June, weekly average viewings had increased to 16, demonstrating increased demand from businesses for City offices.
Likewise, the tracker reveals growth in the number of enquiries into City offices. May 2021 saw an average of 69.7 enquires per week from City Agents Society, increasing to 102 per week in June 2021 – nearly double the weekly average for 2020. This is now averaging 84 per week in recent months. Recent City office deals also demonstrate increased activity in the market. Snapchat recently made an offer for four floors at The Bloom, totalling 115,000 sq ft, and Inmarsat committed to 50 Finsbury Square, comprising 117,933 sq ft.
Similarly, the fintech sector has experienced growth during lockdown, leading to active enquiries from Go Cardless (70,000 sq ft), Braze (40,000 sq ft), Tik Tok (90,000 sq ft) and Afterpay (30,000 sq ft), all of which are looking to expand their offices substantially. Meanwhile, professional, finance and corporate businesses are actively looking for new space ahead of their respective lease expiries, notably Addleshaw, Lewis Silkin, abrdn, Reed Smith, Aviva, Kirkland and Ellis, Allen & Overy and Hogan Lovells. After a slow 18 months and period of prolonged uncertainty, the City leasing market is experiencing a significant improvement in demand, with Allsop’s viewings and demand tracker indicating that activity is likely to continue at pace in Q4. Occupiers are now realising the value of improved collaboration through a more intensive use of the office. This is now beginning to filter through with increased take up figures and several deals for ‘Best in Class’ pre-let stock.