The new Facebook headquarters in London’s King’s Cross is helping to bolster the capital’s commercial property market.
In the third quarter, take-up of office space in Central London reached 3.4 million sq ft – well above the 10-year average of 3.1 million sq ft, according to CBRE.
Take-up in the year to date has reached 9.8 million sq ft, which is higher than both 2016 and 2017.
The largest deal of the quarter saw Facebook acquire 600,600 sq ft across two proposed developments in King’s Cross.
There were a further four deals of over 100,000 sq ft, two of which were in the City and two in the Docklands.
Driven by the Facebook deal, the creative industries represented the largest proportion of take-up in Q3 at 41%, followed by business services (23%) and banking and finance (20%).
Business services take-up was led by acquisitions by flexible office operators, the largest of which saw WeWork acquire 52,300 sq ft at 1 Waterhouse Square, EC1.
Under offers in Central London reached 3.9 million sq ft in Q3, an annual increase of 21% and significantly higher than the 10-year average of 2.9 million sq ft.
The largest unit under offer at the end of Q3 was at 5 Merchant Square, where 159,200 sq ft of space is under offer to a confidential occupier on a sublet from Marks & Spencer.
Emma Crawford, managing director, London leasing at CBRE, said: “Q3 saw a resilient performance across the London office market, with requirements for space from the banking and finance sector proving exceptionally strong.
“In what is a continuing trend, occupiers showed a vigorous preference for new space across the quarter, with new or pre-let space representing nearly half of all take-up, taking it significantly above the 10-year average.”
The deal by social media giant Facebook was first revealed last year, when it was reported that Facebook intended to lease a minimum of 400,000 sq ft at the King’s Cross Central development, which is also where Google parent Alphabet is developing its new UK headquarters.
At 24 hectares, King’s Cross Central is one of Europe’s largest urban regeneration projects. It is bordered by the new Eurostar line from France and bisected by Regent’s Canal.
Google is planning a new 92,000 square metre “landscraper” London headquarters, which will have 11 storeys and stretch parallel to the platforms of King’s Cross railway station.
Combined with Google’s current King’s Cross office around the corner, and a third building that the company also plans on moving into in the area, it will form a new campus that will house 7,000 Google employees.
DealMakerz thinks the CBRE figures not only demonstrate that London is still the fintech capital of Europe, but also highlight the ongoing attractiveness of its commercial property industry in a post-Brexit world.
Last year, take-up of office space by tech, media and telecommunications firms in Central London was 25% above the long-term average.
And since 2014, the annual value of London’s commercial property sales have soared by a huge 166%. With £12.7 billion of sales already achieved in 2018, Brexit uncertainty is clearly failing to dampen investment appetite.