London Docklands Office Lettings Review

Recent research by Cushman & Wakefield on London Docklands office lettings markets revealed that in the second quarter of 2019 826,000 sq ft of office moves were agreed. This is the highest quarterly leasing volume for the area since Q2 2015. The total of 949,000 sq ft for the first half of 2019 is 46% above the five-year first half of the year average of 648,000 sq ft and significantly ahead of the same period in 2018.

The biggest transactions included the 358,000 sq ft pre-let by the European Bank for Reconstruction and Development (EBRD) at 5 Bank Street, which was the largest transaction in Q2. In addition, WeWork’s acquisition of 287,000 sq ft at 30 Churchill Place on a sublease from the European Medicines Agency, also made a large contribution. Consequently, Q2 take-up was dominated by the banking & finance and flexible workspace sectors, which accounted for 40% and 38% of quarterly take-up respectively. The public & government sector (18%) continued to feature, especially in nearby Stratford. There were also moves in Docklands for PKF Littlejohn, London, Borough of Tower Hamlets and Revolut.

Space under offer fell during the quarter, due to the leases signed by EBRD and WeWork. Overall office requirements in Docklands fell to 3.9m sq ft. This total is still 25% above the long term average of 3.1m sq ft, although this total also reflects companies that are also looking at other areas such as the City of London and West End. Business services and banking are the most active sectors in terms of office demand. Metropolis is monitoring office demand from tenants such as Clifford Chance, Citigroup and China Telecom.

Metropolis is monitoring the plans of over 130 office tenants that have lease expiries approaching in the London Docklands area over the next two years.

There is currently 2.9 million sq ft of space under construction in Docklands, of which 1.4 million sq ft (47%) is pre-let or under offer. The total volume of speculative space under construction increased for the second consecutive quarter to 1.5 million sq ft, up from the 1.2 million sq ft at the end of Q1. This was driven by two new starts at the Wood Wharf development: The Market Building (213,000 sq ft) and Frameworks Building, (250,000 sq ft), both due to complete in late 2022.