Savills : Greater London and South East offices record 46% YOY growth in 2021

Leasing activity was up across the whole region with the northern M25 seeing 148% increase on 2020 and the Thames Valley seeing a 57% rise. The continued growth in demand for best-in-class schemes was demonstrated with 65% of take-up being for Grade A space, which increased to 79% in the Thames Valley.

The return of corporate demand was a major driver of occupier take-up with 45 deals over 20,000 sq ft, representing a 15% increase on 2019. Of these, 10 deals were 50,000 sq ft or larger, the highest number since 2018.

At the smaller end, take up between 5,000 to 10,000 sq ft was 26% down on the pre-Covid five-year average, although on a par with 2018 and 2019.

The completion of new schemes in 2021 resulted in record rental levels being achieved in 13 individual sub-markets including Wimbledon (£56.00 per sq ft), Windsor (£45.00 per sq ft), St Albans (£39.00 per sq ft) and Watford (£37.00 per sq ft). A combination of highly specified, sustainable, amenity rich buildings coupled with limited competing stock helped to underpin these rental levels. This trend is forecast to continue with only 1.6 million sq ft of speculative new office development to be delivered between now and end of 2024.

Jon Gardiner, head of national office agency at Savills, says: "The early leasing activity in 2021 continued through the year and whilst we aren't out of the woods yet with regards to Covid, 2021 was a significant confidence booster for the market with take up being only 2% below the long-term average.

The key issues for businesses are largely twofold: firstly, the purpose of the office and how it delivers on their flexible working policies, and secondly, the drive to achieve net zero or low carbon in their office real estate. Looking forward these themes will be determining factors in shaping all office markets, and those owners who are able to deliver on these aspects will be well placed to capitalise from the growing economy".

Rob Pearson, director in the office tenant representation team at Savills, adds: "While companies are still trying to understand exactly what hybrid working means for them, what is clear is that the environment offered is now just as important as size requirements. If you get this right then the office becomes a productive place where employees want to spend time."