Thought of the Week

Despite the rhetoric, office occupier demand remains robust

February 8, 2024 2 Minute Read

By Jen Siebrits Simon Brown

Metropolitan Office Building

Whenever a high-profile large office occupier reduces its footprint, it is reported as “yet another example of hybrid working decimating the office market”. Indeed, CBRE’s European Office Occupier Sentiment Survey 2023 pointed to a likely reduction in space taken by corporate occupiers. However, in Central London, occupier contraction is actually in the minority rather than part of a trend.

Of the 140 Central London occupiers with space over 20,000 sq ft that have moved from one building to another since Q3 2021, 88 have moved to larger premises, and only 52, or 37%, have shrunk. As well as these movers, there have been 91 new occupiers asking for space of more than 20,000 sq ft. These new entrants have in total occupied 4.4 million sq ft of space.

Altogether since the end of lockdown, there have been 187 growth deals, compared with 58 contraction deals. That means 75% of the market movement has been in growth mode.

The narrative has started to shift. Not long ago it seemed as though the consensus view was that hybrid working would cause the office market to shrink, but more and more commentators are starting to suggest that this has not come to pass, as evidenced by React News.

Figure 1: Number of growing and contracting occupiers within Central London, deals transacting between Q3 2021 and Q4 2023 over 20,000 sq ft

Source: CBRE Research