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The strong growth in employment is having an impact on the market but it is argued that we have not yet seen the full effect of it. Employment growth is currently at or near record levels both in London and nationally. In London, employment has grown by more than 4% over the past 2 years which is contrast with the long run average of about 1%.
Recruiters continue to report strong hiring intentions and increasingly skill shortages in certain sectors. On the other hand, while there has been strong growth in take up and demand in the London Office market it still seems that the majority of the major deals are still driven by lease events and consolidation as opposed to outright expansion. Many companies have been able to take on existing staff within their existing space which is accompanied by an ongoing productivity agenda and a more efficient use of space.
However, with employment growth at these record levels there will be more expansionary activity within the market and there are signs that this may start to come through toward the end of this year as we move into 2015. There is currently 3.5 million sq. ft. under offer which is the highest level since 2007 and indicates that we will get a further strong wave of leasing activity.
The office market is quite tight at the moment with a shortage of grade A supply. With further strong employment growth and expansion the office market is expected to tighten further and those grade A supply shortages to become acute in 2015.
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.