Rising confidence among London office occupiers – Cushman & Wakefield
The last three months have shown signs of returning confidence among occupiers of offices in London, according to Cushman & Wakefield’s latest research. The amount of office space in London under offer jumped by 16.3% in Q1 2012 from the previous quarter. The largest increase was in the market for offices in the City and office space in the Docklands, where 1.18m sq ft of offices were under offer across 174 deals – up 53.4% from the final quarter of last year.
C&W says that some large companies that had been considering relocating had previously put their plans on hold but the returning confidence has caused them to dust off those plans and actively seek new office space. Active demand during the first quarter rose by 10% in the West End offices market, to 3.9m sq ft, and was up 6% in the City & Docklands to 4.7m sq ft. Across London as a whole demand was up almost 8% from Q4 2011, the firm notes.
The research shows that the search for cost-effective office space has continued to boost new office submarkets in London including Clerkenwell, Farringdon, Southwark, Kings Cross and Shoreditch. “Supply is edging downwards in certain submarkets against a backdrop of low levels of speculative development activity due to be delivered between now and 2015,” C&W adds.
Vacancy rates in the City & Docklands market have remained at about 8.5% and prime rents also steady at £55.00 per sq ft. The picture is similarly stable in the West End where vacancy rates are 4.7% and prime rents at £102.50 per sq ft, according to the research.
James Young, head of Cushman & Wakefield London offices, said: “Although take-up continues to be restrained, there are the first signs of returning demand from occupiers. There have been several large pre-lets during Q1 this year, such as UBM at 240 Blackfriars Road on the South Bank and Burberry at 1a Page Street in Westminster.”
“With economic conditions likely to remain tough, we expect to see more businesses pre-letting space in 2012. The rising submarkets are well-placed to benefit from occupiers becoming less tied to location and more focused on cost-efficient offices,” he added.
