Following my review of Knight Frank's M25 and SE Office Report: The Next Chapter 2021 below are my key occupier takeaways from the Q4 update:
Occupier demand remains strong
Q4 2021 was the best fourth quarter for occupier activity in 2 years and a 10% improvement on Q4 2020. Over the whole of 2021, up-take was 24% ahead of 2020.
Bigger is better
Deals for large space requirements (defined as over 50,000 sf) made up a significant proportion of transactions and were at their highest level since 2018.
Vacancy rates remain stable at 6.9%, the same as at the end of 2020, and just below the 10 year average of 7%. The pipeline is limited, so there is a expectation of low supply for at least the next 24 months.
TMT and Life Sciences
The TMT sector accounted for 29% of up-take, which was the highest proportion on record, with demand focused around the M4 corridor. The Life Sciences sector was dominant in the Golden Triangle (Cambridge-Oxford-London), with limited vacancy expected to lead to speculative development. Offices offering laboratory capability in addition to incubation facilities will increasingly be sought after.
Green is good
ESG and sustainability will drive office re-locations in 2022, as businesses seek to meet their commitments to employees and shareholders.