Office real estate, along with logistics and retail, is a subsector of the commercial non-residential property sector. The office real estate market includes any investment into the subsector, such as new construction and developments, refurbishments, reselling and leases. Multiple factors can play a role in the decision to choose a city for investment and development, some of which are transport connectivity, forecasted real estate returns, a city’s economic performance, availability of assets/opportunities for new development, market size and liquidity, regulatory environment, digital connectivity, attractiveness to talent, city leadership, housing affordability, and affordability of space for new/small/growing businesses.
As of the beginning of 2019, Central London was one of the three top destinations for office real estate investment along with Paris and Germany's four largest cities Berlin, Hamburg, Munich, and Frankfurt, attracting investment worth approximately 4.7 billion euros. While investments have significantly decreased in comparison with the first half of 2017, take-up of office space in Central London has not declined and London's prime office vacancy rate is still below the long-term average, showing a stable demand for office space. At approximately 1.39 thousand euros per square meter as of the second quarter of 2019, annual rental costs in Central London remain the highest among major European cities.
