The latest (Q3) London Office Quarterly Market Update by commercial property consultants DeVono Cresa has revealed that leasing across the Central London office market in Q3 2020 increased by 11% on the previous quarter to 1.3m sq ft.
However, this was well below the long-term quarterly average of 3m sq ft, despite the travel and wider lockdown restrictions being eased, and the reopening of the hospitality sector during the third quarter. The firm’s data also shows that the total amount of office space leased the capital in 2020 (Q1-Q3) equates to 5.2m sq ft, which is the lowest level recorded and is down 4% on the same timeframe in 2009 during the Global Financial Crisis (GFC) – the previous low.
The report states: ‘With little signs of a sharp rebound in Q4, it is likely that the final annual total will mark a new historic low point. Our research also indicates that in the period following the economic/political uncertainty, where leasing activity declines, there is almost always a phase of significant bounce back. The pent-up demand from deferred decision-making returns. In 2016, there was six months (Q2-Q3) of lowered demand because of the EU/UK referendum campaign and result, before a 92% upturn in Q4 take-up. Similarly, in 2009, leasing rebounded after two quarters of lower-than normal activity, this time by 77%.
‘However, the situation that we find ourselves in today is different. The COVID-19 pandemic is not just a health crisis that has sparked an economic downturn, but a point in time which is likely to redefine the way we work, where we work and how we interact with each other. Whilst we expect a rebound in business appetite for office space in 2021, it may not follow the same path as previous downturns, both in time and scale.’