September 17, 2014
Increased pressure on London rents are being predicted as the latest figures by DTZ show the availability of office space in central London is now 20 per cent lower than the same period in 2013, and 30 per cent below the 10 year average. While London office take up rose by 17 per cent over the same period in 2013, all Central London markets, except the South East fringe, are seeing year-on-year decreases in supply of at least 15 per cent. The North West fringe, the Docklands and the West End have seen the biggest falls in availability over the past 12 months (down 53%, 36% and 30% respectively) with availability in the City falling by 17 per cent over the same time period. A significant development has been the availability of second hand space falling by a third (33%) to 5.6 million sq ft over the past 12 months – 47 per cent below the ten year average.
This is in sharp contrast to the availability of newly built and refurbished space which fell only 2 per cent over the same time period.
All Central London markets, except the North West fringe, saw year-on-year increases in take-up. The biggest increase was seen in the Docklands, with 679,000 sq ft transacted over the first six months of the year, compared to just over 100,000 sq ft at the same point in 2013.
The South East fringe also saw a significant uplift (91%) over the same period in 2013, with 830,000 sq ft transacted this year and the West End and Midtown saw increases of 34 per cent and 21 per cent respectively on the same period in 2013.
Large transactions are also up, with 18 transactions over 50,000 sq ft in the first six months of 2013. Half of these were for offices in the City and a further seven were located in the fringe markets of Docklands, South East and North West fringes.
Commenting on the report Richard Howard, Head of Central London Agency said: “Availability across Central London has fallen month on month this year and is now 20 per cent below the same period in 2013, as well as being 30 per cent below the ten year average of 16.3m sq ft.
“A number of large deals have also been completed in the first half of 2014 and this uptick in leasing activity is expected to continue – DTZ is currently advising on six deals with parties in negotiations to take more than 50,000 sq ft.
“With take up significantly higher than the same period in 2013, these conditions are likely to continue putting upward pressure on rents.”