Central London office rents set to rise – CBRE
Available office space in Central London fell to its lowest level for two years in June, says CB Richard Ellis. The group’s monthly overview of the Central London office market reports that availability fell by 0.5m sq ft in June to 15.8m sq ft, which represents an availability rate of 7.2%. Both new and second-hand space saw declines in availability.
In the West End, availability fell nearly 0.4m sq ft to 5.9m sq ft, while available City office space dipped 0.2m sq ft to 6.1m sq ft.
“The tightening of supply is the key trend to emerge over the last year,” CBRE noted. It says that availability, rather than demand, will be the key driver of rental growth over the next year.
Central London offices take-up picked up strongly in June at 1.4m sq ft, but the rate for the quarter was still below average at 2.7m sq ft. However, CBRE points out that the dip in Q2 demand is from a near-record level – take-up for the year to date is more than three-quarters of 2009’s level. And this, together with the fall in supply, sets up the conditions for a recovery in rents during the second half of 2010.
CBRE this week also published its Monthly Index, showing that the investment market is slowing as yields flatten. Outside London, occupier markets remain fragile, the group says. The All Property total return for June dipped to 1.1% from 1.2% in May, with capital growth slowing marginally to 0.6%. While offices outperformed with total returns of 1.3% and retail showed some resilience at 1.1%, the industrial sector produced a total return of 0.6% and no capital growth.
NovaLoca wishes good luck to all those taking part in today’s Property Triathlon at Eton’s Dorney Lake. At least the sun is shining!
