According to British Land, demand for office space in the City of London has rebounded as employers look for high-quality properties.
The occupancy rate across the entire portfolio is over 96 percent and the Square Mile is performing ‘particularly well’, the FTSE 250 company said yesterday when announcing its first half results.
The landlord added that city absorption in the third quarter was 5 percent above the long-term average.
Banking and financial sector customers are driving activity in both the City and London’s West End.
Employers are looking for high-quality properties – with amenities such as terraces, cafes and breakout areas – to attract top talent in the era of hybrid working, the company said.
Recovery: British Land says its portfolio occupancy rate is over 96% and London’s Square Mile (pictured) is ‘performing particularly well’
Searches for office space in London were 25 percent below the ten-year average in the first three quarters of 2023, according to Liz Truss’ mini budget.
But the volume of space offered is 8 percent higher than the ten-year average and active demand is 27 percent higher as the sector recovers.
However, asset values have taken a hit due to the rise in interest rates, with the Bank of England’s base rate currently at 5.25 percent.
The value of British Land’s properties fell 2.5 per cent in the half year to £8.7 billion, wiping almost £200 million off the value of the portfolio year on year.
Pre-tax losses more than doubled from £20 million to £49 million in the six months to the end of September, compared to the same period last year.
The company expects to achieve the high end of its full-year expectations of 2 to 4 percent rental growth for corporate campuses, 4 to 5 percent for London city logistics and 3 to 5 percent. for retail parks.