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Research released by Colliers International indicates that prime office space in the capital is fast running out.
Despite other areas in London gaining popularity, there are many companies who only wish to base themselves in central London, so much so that demand is now 25% above the 15-year average.
The analysts have revealed that the research shows a dearth of grade-A space in Holborn and Belgravia, and less than six months’ supply in Euston, Bloomsbury, Marylebone, Soho and Fitzrovia.
The highest levels in central London in terms of grade-A space are in Covent Garden, following the recent completion of a new development, Aldwych Quarter, comprising 290,000 square feet.
In terms of second-hand product, availability has fallen 36% over the past 12 months. Fitzrovia, Bloomsbury, Soho, Marylebone, and Euston all have less than six months’ supply.
To compound the problem, Colliers says, there are no speculative completions set to take place in Belgravia, Euston, Paddington and Canary Wharf this year, whereas City markets will see above-average completions of such development, perhaps easing supply in those areas in the short term. The West End and Midtown are expected to continue to experience restricted supply during 2015.
While speculative investment and completions are due to increase over the next 18 months, the lack of current supply is likely to continue to boost rent levels during that period – and there is no guarantee that such increase in future supply will transform the market if demand also rises.
The figures mean that some areas of the capital will simply have to be overlooked by businesses wishing to relocate or set up offices. Where supply is non-existent, these companies will instead need to look to places such as South Bank or Canary Wharf.
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.