COST-CONSCIOUS OCCUPIERS SCALE BACK DEMAND TO MATCH POST-PANDEMIC TRADING CONDITIONS
Occupier take-up was 11.9m sq ft in Q4 2023, up 4% on Q3, but 20% lower than a year earlier. Total demand in 2023 was the lowest since 2017 and 16% below the 10-year average, reflecting the general pause in expansionary activity and the more challenging and uncertain economic backdrop. Occupiers took a more cautious and cost-conscious approach, befitting the weaker post-pandemic trading conditions and elevated cost of doing business.
Q1 2024 has started off more positively. Occupier deals rolled over from last year have completed and investors are increasingly confident that debt financing will become easier and more affordable. Macroeconomic headwinds will continue to weigh on occupier activity in 2024 though, and long-term business planning will be hampered by short term uncertainty. But lettings will continue to tick over and the outlook for prime rents remains positive, albeit not as stellar as during the pandemic years.
