London developer Derwent has predicted that the ‘flight to quality’ will continue in the capital’s commercial property market, reporting good demand met by short supply in its core office market.

Paul Williams, chief executive of Derwent London, said: “We are seeing good demand for our distinctive brand of high-quality offices, with short supply of prime space in our core locations. Despite the uncertain macro environment, the continuing flight to quality combined with our strong financial position gives us confidence that we are well placed with a pipeline of value-adding opportunities.”

According to the results report, businesses were “re-engaging with their long-term occupational requirements” as covid restrictions have lifted, resulting in market take-up in the first half of this year being 16% above the 10-year first half average. Banking and finance was reported as the most active sector though the vacancy rate remains high in the city at 12.3%.

Occupier needs reportedly now cover a broad spectrum from having very flexible to long-term leases, with businesses demanding a combination of adaptable and sustainable buildings with high quality amenities. Many businesses are apparently “prepared to pay premium rents” for spaces that meet their requirements due to relatively short supply of high-end space.

Derwent currently has two offices under construction, both due to complete in 2025, and the firm has a further 1.9m sq ft of space in its long-term pipeline.

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