London office take-up “highest for 4 years”
CB Richard Ellis has joined the chorus of voices saying that the lack of new office space in central London is squeezing prices higher. During Q1 2010 the recovery in prime rents continued, the group says, and take-up for the quarter was the highest recorded for four years, at 4.4m sq ft. Banks were the key driver of take-up, accounting for 40% of this total.
Although rents in Central London are still 4% lower than a year ago, on a quarterly basis the Central London prime rent index was 6% higher, CBRE says. “This trend was reflected in prime rents, which rose over the quarter to £47.00 per sq ft in the City and £85.00 per sq ft in the West End,” it adds.
Digby Flower, head of Central London office agency at the group, noted: “The high level of take-up has been fuelled by a combination of pent-up demand and good opportunities for tenants looking to take advantage of market conditions. The strong tenant demand produced sharp reductions in supply, with the result that the market balance is tipping back towards the landlord, evidenced by the prime rent rise across all markets and the reduction of rent-free periods.”
CBRE says a new phase of development is now underway in the capital, but the effects will not be felt “for a few years yet”.
