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The office leasing market in Central London is as tight as it possibly can be at the moment. West End vacancy rates are hovering around the 4% mark and all the way across Midtown to the City, occupiers are really struggling. With demand constantly increasing and supply only very gradually increasing and any major development or large scale refurbishments still 12 months away, this will continue to be the case for at least the rest of this year and most likely through most of 2015 as well.
The size bracket that is struggling in particular is the 1,000 to 2,000 sq. ft. mark. This mark tends to be occupied by start-ups or first time movers so there are constantly people entering the market at this size and unfortunately at the moment, there simply isn’t the supply to keep up with them. The companies that enter the market at this size also tends to be small to medium sized firms and therefore usually sees the greatest amount of turnover within the market as tenants look to either expand again after a year or so or unfortunately go into administration. However, in the current market climate occupiers who would have before taken 1,000 sq. ft. in the West End are struggling to find the right option in time and therefore having to take a serviced contract for the interim, which has led to a boom in the serviced office market.
One area that is struggling in particular is Victoria, where Morgan Pryce recently acquired 1,500 sq. ft. of office space for a financial firm. This area for this size is very much acting like the residential market where a property comes on to the market on the Monday and is under offer by Friday. Land securities have been regenerating the whole area over the past few years but again this 1,500 sq. ft. mark has been missed and combined with the relaxed change of use laws to residential. Victoria again has been starved of the much needed 1,500 sq. ft. of space.
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.