The pandemic significantly affected leasing activity during Q2, according to an analysis by Avison Young in its most recent quarterly Economic & Property Market Review (EPMR).
Central London take-up fell to 1.1 million square feet, which was 57 per cent below the 10-year average. Availability rose marginally to 12.7 million sq ft, which was 5 per cent up on Q1 2020 but still down on the 10-year average. June was by far the strongest month of Q2 recording 48 per cent of the quarter’s take-up. August has been relatively subdued, but this is partly because of holidays and it is expected that activity will pick up in September.
The lockdown has also had a dramatic effect on office take-up across the ‘Big Nine’ cities, with by far the lowest quarterly totals since we started recording the data in 2009, amounting to 329,000 sq ft in the city centre and 447,000 sq ft in the out-of-town markets. These figures were 75 per cent and 42 per cent below their respective 10-year quarterly averages.
Most markets have suffered a sharp dip in take-up, although there was some notable activity in the out-of-town markets. In Manchester, Newcastle and Glasgow there were several circa 30,000 sq ft deals, with the latter two cities recording above average take-up.
The report says there is an expectation that the number of transactions to increase as the year progresses, with September anticipated to show a step change in activity and many companies expected to return to the office. However, it is not expected that the level of transactions will return to more ‘normal’ levels this year.