London office take-up among law firms hits a new record
Making sense of the latest trends in property and economics from around the globe
3 minutes to read
The new year bounce
The end of 2022 was particularly quiet in the UK residential market as prospective purchasers balked at the spike in mortgage rates. It was unclear at the time whether movers had decided to stay put or simply shifted plans into the new year.
The latter appears to have been true for meaningful numbers. The number of prospective buyers contacting agents climbed 4% in the first two weeks of the year compared to the same period in 2019 and is up 55% compared to the fortnight leading up to Christmas, according to Rightmove data released this morning. That represents the biggest new year bounce since 2016. Asking prices rose 0.9%, the biggest increase at this time of year since 2020.
That's not to say conditions are normal. The number of 'enquirers', or potential purchasers, is still down by a third compared to this time last year, however, the relative stability in the mortgage market has clearly coaxed a lot of would-be buyers off the fence.
Housing targets
Just before Christmas, the government published a consultation on proposals that would ease pressure on councils to approve housing. Downgrading the 300,000 annual housing target from 'mandatory' to 'advisory' generated the most interest, but the proposals included dropping the requirement to demonstrate a deliverable five-year housing land supply and the requirement on underperforming councils to provide an additional 20% "buffer" of housing sites.
In the five weeks since that announcement, nine authorities have announced they are pausing or shrinking their plans, according to a report in the Guardian. They join roughly thirty others that opted to pause plan-making while they waited for the publication of the consultation.
Planning was already a source of frustration to housebuilders and the situation is likely to exacerbate growing pressure on delivery. We looked at trading statements from Persimmon, Barratt Developments and Taylor Wimpey on Friday.
Official figures published in November revealed that 232,820 net additional dwellings were completed in England during 2021-2022, a 10% increase from the very low base set during the pandemic the previous year. Some 210,070 of those net additions were new build homes.
Office space
Law firms took a record 1.5mn square feet of space in London in 2022, according to Knight Frank data covered in this morning's FT. Almost all of that space was new or comprehensively refurbished.
The sector has become a microcosm for the biggest themes impacting the London office market. Our Law Firm Real Estate Report, published last year, point to a sector seeking to fully utilise the benefits of new workstyles while investing heavily in the office, both as a differentiator in the war for talent and to burnish their ESG credentials in the face of growing pressure from regulators, clients and employees.
Three in four law firm leaders say that clients always, regularly or sometimes, always or regularly assess ESG policies and targets as part of their processes for awarding the firm work, according to HSBC research quoted in our report. Meanwhile, at the time of publication, only a quarter of the offices occupied by the UK’s top 200 law firms in the UK were BREEAM rated.
In other news...
Andrew Shirley on the rocky road to Net Zero.
Elsewhere - stamping on stamp duty would free empty nesters to fly their coops (Times) and finally, commercial construction groups charge highest rates in two decades (FT).