City office take-up on the rise

Offices in the City vacancy rates over the past 18 months have been the highest since the Lehman Brothers went bust, but the last 2 quarters have seen more office take-ups in the City than the West End. As a result the vacancy rates have dropped below 9%. Over the last couple of years, acquisition agents dream of large City requirements, in this strong tenant market tenants were able to dictate more flexible lease terms, better rents and improved rent frees. With the lack of demand and surplus of supply in the City tenants have had a free reign of the market, but this is starting to end as more occupiers look to take space in the City.

Since the Lehman crash the financial sector has been hit the hardest, with existing occupiers looking to consolidate their existing business, become more cost effective and hold off any growth plans they may have had. In recent years there have been very few start-ups or expansions within the financial sector. However, this is all changing, with banks looking to lend more easily and the economy starting to become more stable the financial sector has started to grow again, with existing tenants looking to move into larger spaces and new tenants looking to move into the City and as a result of this the City market is picking up, slowly.

However Alex Goode from Morgan Pryce believes, ‘whilst the financial sector has stuttered over recent years the property market has found a new sector to drive it forward in London; the TMT sector. The media sector has seen huge growth and large take-up in the City fringe; Shoreditch and Clerkenwell predominately, meaning rents have soared past £30 per square foot, with some landlords achieving close to £42.50 per square foot in some parts of Clerkenwell. But whilst there has been huge growth in the TMT sector it is the recovering financial sector which provides the most confidence and evidence of the economy picking up which will give landlords and agents more confidence in 2014 in the City whilst the West End struggles on with a lack of supply.’ 

This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.