City of London office demand bounces back
DEMAND for office space in the City of London has bounced back as employers seek highquality properties, according to British Land.
Occupancy rates across its portfolio have hit more than 96pc and the Square Mile is ‘performing particularly well’, the FTSE 250 firm said yesterday as it revealed first-half results.
The landlord added that take up in the City in the third quarter soared 5pc above the longterm average.
Clients in the banking and financial industries are driving activity in both the City and London’s West End.
Employers are seeking highquality properties – with amenities such as outdoor terraces, cafes and breakout spaces – to attract top talent in the age of hybrid working, the company said. Searches for London office space in the first three quarters of 2023 was 25pc below the tenyear average following Liz Truss’ mini-budget. But the volume of space under offer is 8pc ahead of the ten-year average and active demand is 27pc higher as the sector bounces back.
However, asset values have taken a hit due to the increase in interest rates, with the Bank of England’s base rate currently at 5.25pc.
The value of British Land’s properties dropped 2.5pc to £8.7bn over the half year – wiping nearly £200m off its portfolio value year on year.
Its pre-tax loss more than doubled from £20m to £49m in the six months to the end of September, compared with the same period last year.
The firm said it expects to hit the top end of its full-year guidance of 2pc to 4pc rental growth for business campuses, 4pc to 5pc for London urban logistics, and 3pc to 5pc for retail parks.