Derwent London, the largest office-focused real estate investment trust (REIT) in the capital, is experiencing a surge in leasing activity as businesses respond to return-to-office mandates and a limited supply of high-quality office spaces. The company reported £2.7 million in leasing activity year-to-date, with an additional £3.7 million of rent under offer. Open market lettings have increased by 2.7% since the end of last year, and the vacancy rate stands at a low 3.4% across its 62-property portfolio valued at £5.0 billion.
One of Derwent’s notable achievements is the pre-letting of all 204,300 square feet at its 25 Baker Street W1 development. The average rent achieved was £104 per square foot, 16.5% above the estimated market value, setting a new benchmark for the area.
The central London office market is witnessing a post-financial crisis high in investment volumes, with figures more than doubling to £2.4 billion year-on-year in the first quarter, according to CBRE. This robust demand is driven by an ongoing return-to-office trend and a scarcity of prime office spaces. Larger occupiers are planning further ahead than ever before, as the medium-term pipeline remains constrained.
Derwent’s CEO, Paul Williams, highlighted the company’s strong position, noting a high-quality portfolio with an attractive average lease term and a substantial development pipeline. The company forecasts a 3% to 6% rise in rental values for its portfolio in 2025.
With three West End projects totaling 500,000 square feet in its pipeline and major refurbishment works at three additional properties, Derwent London is well-positioned to meet the growing demand for premium office spaces in central London.
