Central London Office Market Sees First Rise in 12 Months
Take-up in the Central London office market during quarter two increased by 37% in comparison to the previous quarter and is this first rise in 12 months says DTZ.
According to statistics revealed in the summer edition of the Central London Offices report, published by DTZ Research, take-up rose from 0.16 million sq m (1.7 million sq ft) recorded in the first quarter, to 0.22 million sq m (2.4 million sq ft).
However, although there are signs of a revival in take-up levels, the gulf between take-up and availability continued to widen in Q2 with availability rising by 10% to 10.49 million sq m (26.8 million sq ft), up from the 2.25 million sq m (24.2 million sq ft) recorded at the end of the first quarter. Availability in Central London now stands at 12.5% of stock compared to 7.6% at the end of 2001.
Despite the increase in total availability, the delivery of newly marketed space has slowed from 0.6 million sq m (6.5 million sq ft) in the first quarter to 0.47 million sq m (5.0 million sq ft) in the second quarter.
The development tap has also been turned off with office space under construction in Central London now totalling 1.2 million sq m (12.5 million sq ft), a fall compared to the previous three months. Of this total, 0.48 million sq m (5.2 million sq ft) is speculative and two thirds of this latter figure will be delivered in the City sub market.
There have been no major development starts in the second quarter of the year in Central London.
In terms of rental levels, statistics from DTZ Research show that prime headline rents in the City have continued to fall and are now estimated to be £511 per sq m (£45 per sq ft). In contrast, West End prime rents have remained unchanged at £646 per sq m (£60 per sq ft.).
John Forrester, Head of Central London at DTZ, comments: "Whilst signs suggest that business confidence and demand may be improving, uncertainty over prospects for the economy and the property market generally is still causing developers and occupiers to adopt a cautious approach. Until we see the month-on-month rise of availability plateau, we can see no prospect of positive rental growth in the Central London office market."