The amount invested in central London offices increased by 12% in the second quarter to £1.54bn, with 50 properties changing hands.
Leasing activity in London increased by 21% in Q2, driven by financial firms and demand for sustainable office space. Insurance and financial services accounted for nearly a third of the leased office space.
According to the S&P Global UK purchasing manager’s index demand for UK services is growing at the fastest pace since May 2023.
While hybrid working since the Covid pandemic remains popular, particularly with employees, there are signs that some businesses are asking their employees to return to office-bound working.
But how important is it for a business to have a presence in London, whether leasing or buying?
Unlike the UK real estate trends of residential, retail, industrial and hotels, investment in office space actually climbed higher in the final quarter, albeit by a tiny amount, prompting some to speculate that an end to the rental recession might be in the offing.
However, many large companies have reduced their London office space, among them HSBC.
Among the concerns have been a lack of supply of suitable premises, especially with sustainability and environmental concerns, as well as higher interest rates and easing costs, playing their part in decisions.
Whether to buy or lease is also a big factor in decision making.
Renting office space in London provides a wealth of flexibility in terms of sizes, locations, and budgets. But there is less flexibility in what you can do to the space and rental prices can go up.
Buying has its advantages in that it can be a great long-term investment and there are fewer restrictions on how you use the space. However, the upfront costs are higher and you would be responsible for maintenance costs, not to mention tax and insurance.
But ultimately, the first thing to consider is whether your business actually needs a full-time presence in London, especially if hybrid working remains an option and your employees are only going to be there for part of the week.
What do you think? How important is being in London for your business?