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As we enter the final quarter of 2013, we can start to look back at the year and compare it with 2012. In terms of property market figures, the outlook for 2014 looks positive, if the differences recorded between this year and last are to continue.
The signs that indicate the state of the property market include take-up rates, availability of space and quality of that space, levels of rents, properties under construction and their pre-letting levels, and the volume of transactions, among other indicators.
Across the board, the London commercial property market is looking up. Take-up rates are up, in particular in the office space and retail sectors, indicating confidence from both businesses and consumers. The take-up rates are in fact 42% higher than the same summer period last year. Retail is looking stronger than it has done for some time, with rents at an almost-ten-year high, and predictably highest in Bond Street and Regent Street.
Availability of grade-A space is low now that demand is starting to recover, partly as a result of companies having stayed put over the last few years and partly because of the construction projects having been put on hold during the same period.
Rents remain relatively stable, which indicates a residual caution among investors and tenants alike, and such stability is perhaps no bad thing.
There does appear to persist a gap between the markets of the City and Docklands, and the West End. The former are still favoured by the banking and insurance sectors, and there is less availability than in the latter area, which is dominated by the services sector.
New construction has been under way for some time in various areas of the capital. At present there is 6.8m square feet of space in the pipeline, to be completed within the next three years. However, this won’t be soon enough for many tenants, who may continue to look further afield, into the regenerated and regenerating areas of Southbank, Victoria and the Thames Valley, for the space and rent levels they require.
Companies who are wanting greater, and more customised, space, are also increasingly signing up for pre-let space, where they can tailor the specification and square footage to their requirements.
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.