Central London office space in high demand and shops expanding, Landsec says

Demand for central London office space has grown and retailers are eyeing "fewer, but bigger and better" shop locations, commercial property giant Land Securities (Landsec) has said.

The property market is showing signs of strengthening following the pandemic with activity in the capital picking up pace.

Landsec revealed that it returned to a pre-tax profit of £243 million for the six months to the end of September, from a loss of £193 million the prior year.

The total value of its property portfolio remained stable at £9.96 billion for the latest period.

The company said the use of offices continues to grow in central London with demand for modern and sustainable spaces, with its customers planning for more space per worker than they were five years ago.

Retail brands have become more focused on "fewer, but bigger and better stores in key locations", according to the business, which has resulted in store expansions and renovations for brands like Primark and JD Sports.

Rents continue to rise due to there being a shortage of available spaces on the market, while competition among investors has grown, Landsec said.

Landsec'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, Landsec's chief executive said: "Whilst global geopolitical uncertainty has increased, for the UK the general election over the summer has created an element of political stability that has eluded the country for nearly a decade, ever since the EU referendum.

"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."

But Mr Allan added that the Government's economic growth ambitions were "admirable" and it is expecting to benefit from plans to unlock urban residential development.

The remarks follow a swathe of retailers and hospitality groups warning that they will face a bigger tax bill after new measures announced in the Government's autumn Budget.

These included a planned increase to the rate of employer national insurance, as well as a higher national minimum wage from next April.