London’s office market experienced a slight decline in vacancy, compressing 20 bps quarter-over-over to 18.1%, its lowest level in six quarters. This downward trend is expected to continue into 2020 as tenants experience growth and relocate out of owned premises.
While vacancy rates remained stable in the core at 19.2%, the suburban office market decreased 60 bps to 14.7%. Tenants are showing continued interest in the suburban office market due to various factors including free parking, brand new or newly renovated buildings and on-site amenities.
Continued demand for large space requirements has led London’s availability rate to compress 210 bps year-over-year to a new record low of 3.5%. Given the market’s low availability rate environment, there has been an increase in off-market transactions to fulfill tenant requirements.