Knight Frank are reporting strong activity in the south east occupier market, in its Q2 M25 Office Report, with take-up of 671,000 sq ft, an impressive 33% up on Q1. A wonderful fact to reflect upon.

However, this headline figure disguises a skewed marked. Of all of the space let in Q2 a third of deals were in just two cities - Oxford and Cambridge. With the Oxbridge data stripped out, take-up in the remainder of the south east office market was 51% below the 10 year average. Thank goodness for the golden triangle. 

How long can this trend continue? The rents for prime space in these two cities have rocketed in the last 12 months. Cambridge now averages £65/sf, an 18% rise on last year, with Oxford not far behind at £62.50/sf, up 25% on 2022 prices.

Despite market challenges demand remains strong, giving a positive outlook for the second half of the year. Space under offer is at a 5 year high and active demand is reported to be at 5 million square feet, giving a busy outlook. The largest proportion of the reported demand is coming from the TMT sector, which may need to look outside of the Oxbridge markets to meet their requirements.

Space is available, however, with vacancy rates increasing to 7.8%. But again, this statistic is only half of the story. With the bifurcation of the market continuing, the proportion of the vacant space which is Grade A is only 5.8%, which is below the long term average, meaning competition for the best space is likely to remain fierce.