Chasing the product

We have analysed our leasing data over the past five years looking at office take-up over 20,000 sq ft in the City and 15,000 sq ft in the West End, where the tenant has simply relocated from one office building to another (as opposed to acquiring an additional office), excluding serviced office deals.

Since 2014, 60% of occupiers have changed their immediate location either through a change of submarket or primary postcode, reflecting the increasingly footloose nature of central London occupiers.

West End occupier migration since 2014

What has been notable is the number of occupiers who have relocated from the West End to the City. Whilst in total only 57 occupiers previously located in the West End (out of 191), have relocated or expanded into the City market, the total quantum of space they have acquired equates to 3.2m sq ft. This accounts for over a third (35%) of space that was acquired by occupiers previously located in the West End.

In contrast, only 11 occupiers migrated from the City back to the West End, which equates to 514,000 sq ft, 4% of the overall space acquired by tenants previously located in the City).

Over 70% of occupiers who moved from the West End to the City acquired space on larger floorplates with more than half of these occupiers (57%) acquiring space on floorplates sized between 15,000–55,000 sq ft.

We expect to see more West End occupiers migrate east into the City and fringe locations due to greater choice and larger floor-plates being available. Occupiers generally prefer large floorplates to allow increased staff collaboration and efficiency of occupation.

In the City, during 2019, we saw more occupiers relocating to a different submarket within the City than over the five years prior. EC2 was equally popular for attracting tenants already situated in this submarket as well as attracting tenants from other parts of the City.

The largest example being Ashurst, relocating from Broadwalk House, EC2 to take the whole of London Fruit & Wool Exchange, E1 (275,536 sq ft). They then sublet 115,680 sq ft of this space to NEX, who moved into the area from 1-2 Broadgate Circle, EC2.

E1, EC1, EC3 and EC4 saw more tenants relocating from other submarkets over this period. In EC1, the largest example of this occupier migration has been DLA Piper who took 146,482 sq ft in 160 Aldersgate, EC1, migrating from 3 Noble Street, EC2.

Seven out of the 11 occupiers who acquired space over this period in WC1 (Midtown) were West End occupiers previously located in submarkets bordering this submarket (Covent Garden, NOX East).

Over 2019, we also saw an increase of West End occupiers changing submarkets than over the previous five years. The Victoria submarket was particularly popular with occupiers and saw good tenant retention, accounting for almost half of the West End tenants remaining in the same submarket. It also experienced a high influx of tenants from other locations including Oaktree Capital, Cheniere Marketing and Neuberger Berman.

_{Read the other articles within Spotlight: Central London Office Outlook  below}