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Co-Working Space Has Led London Office Leasing Activity This Year

WeWork Entrance
An entrance to one of WeWork's locations.

Co-working and serviced office users were the biggest drivers of the Central London office leasing market in the first half of the year.

The sector took more new space than any other during the first half of 2017, according to data from Cushman & Wakefield, as a result of two or three significant deals and a long tail of smaller deals.

The 1M SF that co-working and serviced offices leased would be enough to fill the Cheesegrater skyscraper, and is way ahead of the second-largest sector, banking and finance, which leased 662K SF.

Tech, which has in the last two years been by far the biggest driver of office leasing, was in third place with 566K SF leased.

WeWork was responsible for the two biggest leasing deals in any sector, taking 283K SF at Two Southbank Place near Waterloo and 155K SF at 125 Shaftesbury Ave. in the West End.

Co-working and serviced offices helped Central London offices defy post-Brexit gloom — in total, 4.8M SF was let in Central London during the first half of the year, up 10% on the same period in 2016.

Cushman said the first half of 2017 marked a coming of age for the sector.

“The market is becoming increasingly competitive and large-scale operators WeWork, The Office Group and London Executive Offices all increased their footprint across central London,” said Amy Emery, Head of Serviced Office Advisory.

“WeWork are currently [offering] to buy or lease a further 350K SF so the trend we are seeing will continue.”

She added that the sector was consolidating, which should drive further growth.

“More traditional owners have also made serious moves into the sector in the last quarter, with British Land launching its Storey concept and Blackstone buying a majority stake in The Office Group. Each development is further evidence of the fundamental changes occurring in the occupational market driven by a desire from companies of all sizes for greater flexibility.”