Surge in demand for prime site office space in London, says Land Securities

Commercial property giant Land Securities (Landsec) has reported a surge in demand for central London office space, with retailers seeking "fewer, but bigger and better" shop locations.

The property market is showing signs of recovery post-pandemic, with activity in the capital accelerating. Landsec disclosed that it bounced back to a pre-tax profit of £243m for the six months ending September, from a loss of £193m the previous year. The total value of its property portfolio remained steady at £9.96bn for the recent period.

The company noted an increasing use of offices in central London, with a growing demand for modern and sustainable spaces. Retail brands are focusing on "fewer, but bigger and better stores in key locations", leading to store expansions and renovations for brands like Primark and JD Sports.

Rents are on the rise due to a shortage of available spaces on the market, while competition among investors has intensified, according to Landsec. The company's portfolio includes office space and retail destinations such as the White Rose shopping centre in Leeds, the O2 Centre in London, and the Bluewater shopping centre in Kent.

Mark Allan, CEO of Landsec, has commented on the current political climate: "Whilst global geopolitical uncertainty has increased, for the UK the over the summer has created an element of political stability that has eluded the country for nearly a decade, ever since the EU referendum."

He also noted the potential impact of fiscal policy on businesses: "Whilst political decisions always require an element of compromise, we are mindful of the risk that the cost of increased taxes could slow down business decision-making."

However, Allan acknowledged the Government's positive intentions, adding that their economic growth ambitions were "admirable" and he anticipates benefits from plans to promote urban residential development.

These remarks come as many retailers and hospitality groups have expressed concerns about facing higher tax bills following new measures introduced in the Government’s autumn , which include a planned increase to the rate of employer national insurance and a rise in the national minimum wage starting next April.