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The latest report from CBRE indicates that the first quarter of this year has been strong in terms of take-up for office space in central London.
The figures show the highest level of first-quarter office space take-up for five years, amounting to 3.1 million square feet being accounted for in the first three months of 2015.
The rolling annual total tells a similar story with the highest take-up figures since 2007, at 15.2 million square feet.
The limited supply of prime office space and a steady demand for such space is pushing rents higher in all markets, according to CBRE, other than the Docklands area. Analysts expect to see rental growth of more than 10% in all areas, predicting increases as high as 15.6% in the West End by the end of the year. Availability is at a 14-year low of 10.8 million square feet, a fall of 3% in the first quarter of this year.
The limited supply is due to a number of factors, including a halt on commercial development during the recession and the relaxation of planning rules, which allow commercial space to be reallocated as more-profitable residential use.
CBRE have indicated that demand is such that the speculative development due to complete this year will not have a significant impact on the pool of available space, thus rents are likely to remain high for some time.
Midtown has been earmarked as the area to watch for strong take-up and rising rents during the rest of the year. New occupiers include Deloitte, which has committed to pre-let 258,000 square feet of space at 1 New Street Square, the size of which transaction tipped the scales upwards for Midtown’s average take-up levels.
Business and financial services are the primary occupiers having an effect on take-up, at 23% and 22% each, and in fact these sectors are at the forefront of many office space lets across the central London markets.
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.