London's Tastiest Office Requirements For 2022
The return to the office is underway, the UK economy has thus far resisted the twin threats of war and inflation, and London in particular feels (and smells) back to something approaching its usual bustling self.
The London office market is no different, and with this in mind Bisnow has sought out some of the capital’s tastiest live office space requirements.
Colliers said there are more than 20 active 100K SF occupier searches across London at present. Not all may come to fruition, but the impact of this occupier interest means that lead-in times look set to increase.
“Occupier activity within the London office market continues to build as 2022 progresses," Colliers Research and Economics Team Director Guy Grantham said.
“What is clear is the desire for new best-in-class product alongside Category A or Category A+ fit-out. London Grade A office take-up surged to 2.4M SF in Q4 2021, and in Q1 2022 to date over 1.2M SF has been leased with a further 1M SF under offer.
“The City of London market is seeing Grade A take-up at similarly strong level, with some 70% of take-up in the year-to-date of Grade A quality. While major requirements such as Hogan Lovells (270K SF) are coming in to land, there are a healthy number of major (100K SF) searches still assessing options.”
Foremost amongst the occupiers in the City looking for space are Morgan Stanley, which is understood to be looking at up to 600K SF, and Clifford Chance, looking at 400K SF. Both are current Canary Wharf occupiers and considering new HQ options across the wider City market.
Other significant requirements include American management consulting firm Oliver Wyman, which is understood to be keen on acquiring 40K-50K SF. However, landlords keen to lure Wyman need to fit around the requirement that the consultant leases a top-of-building space only. Time to get those penthouse office suites ready.
One occupier which has picked its space is international law firm Addleshaw Goddard. The company is believed to be under offer on between 100K and 110K SF at 41 Lothbury opposite the Bank of England.
Yet another law firm, Fieldfisher, is also keen on new space, but possibly not until 2025 or 2026. The firm has a requirement for between 60K and 70K SF. Pennsylvania-headquartered law firm Reed Smith is keen on taking a slice of London in the range of 90K SF.
Looking further ahead the big requirement in the tech sector is Microsoft, which is looking for around 350K-450K SF. The U.S. tech giant employs around 3,000 people in the UK at four locations at present.
In 2017 it opened a new office in Manchester to build its base in the north of England and consolidated its offices across London into its current Paddington site in 2014. The search for a new office is in its infancy. However, a move to Battersea, the City or a new base in the tech cluster near Old Street could all appeal.
With a plethora of occupiers considering moves, a key development to watch as 2022 progresses is how London’s new Crossrail line affects the office market. Access to Crossrail hubs, now a genuine possibility for 2022, is ramping up interest in areas along the line once more. The supply of new office space does seem to be constrained, though.
At the same time, a supply crunch may see some occupiers consider alternative options in 2022 if new office space doesn’t come on the market. Estimates are that 8.5M SF are expected to be delivered across London this year, but 60% of this has already been contracted.
Despite the large requirements on offer, it may not be long leases that many occupiers opt for, especially post-coronavirus. Grantham noted that another tech highflier is looking for space.
“TikTok, which had an additional 100K SF requirement for London office space, on top of its 90K SF commitment to space at Kaleidoscope, decided to opt for flexible office space [at London Wall] instead of conventionally leased product," he said.
