Savills dissects City offices demand
Take-up of office space in the City of London reached 408,000 sq ft in September, Savills says in new research into this market, and this takes the Q3 2012 total to 3.2m sq ft.
The total take-up figure in September was about 15% below normal for this time of year, it adds: although it was 19% above the figure for September 2011, it was 1% lower than the 2008 figure. The tendency towards smaller units has persisted. Savills also says 61% of the available City offices taken up so far this year has been new space or recently refurbished properties.
Savills notes that TMT companies accounted for 29% of take-up in Q3 while insurance and financial services companies took 26% and the banking sector just 2%.
“Considering the swell in supply in SE1 (the Shard, One London Bridge and the Cottons Centre alone accounting for 900,000 sq ft), it does not bode well that this sub-market absorbed just 6% of take-up during Q3,” Savills notes. With other new supply in the market, the current total supply figure has reached 8.5m sq ft and means a vacancy rate of 10.4%, it adds.
Active demand focused solely on the City totals around 3.5m sq ft, Savills estimates, with around half of this coming from the insurance and financial services sectors, and less than 1% from banking. There are 1.7m of active requirements from TMT companies but only 29% of these are focused solely on the City, Savills notes – these occupiers are less tied to specific locations, unlike brokers and bankers.
