Office space take up in London rises 64%
Research released by property firm DTZ has revealed that the take up of office space in London has risen 64% since the same time a year ago.
The research states that take up has increased by around 800,000 sq ft and has been boosted by a number of high profile deals, including Deloitte’s completion on 260,000 sq ft at 1 New Street Square.
Sophy Moffat, senior analyst at DTZ, said: “We are likely to see this pattern of increasing demand and contracting supply for office in the City continue throughout the year, leading to pronounced rental growth.”
As a result of the increase in take up levels, the availability of office space is at its lowest in over a decade and down around 30% annually. This highlights that development is key for the office market, if it is to keep up with the ever growing demand.
The levels of new and refurbished office space has now dropped to approximately 1.5m sq ft, meaning the supply of new space is at pre-recession levels for the first time since the global financial crisis.
With the amount of space continuing to drop, it is believed that rental growth will rise, as stated by Moffatt: “Prime rents are expected to experience double digit rises for the first time since 2010 this year reaching £68.50/ sq ft by the end of 2015. This means the city continues to offer good prospects to investors seeking rental growth.”
DTZ recently completed a 2$bn merger with Cushman & Wakefield
The rise of office to residential conversation outside of the prime London areas is also pushing a rise in office rents in these areas as landlord take advantage of the lack of space.