Businesses have taken 6.5 million sq ft of office space in London during the first half of 2015, with the majority of the take-up recorded in the City, according to DTZ.
There was increased occupier activity across other sub markets, notably King’s Cross and Docklands, but options for businesses are dwindling as supply continues to fall.
Availability has fallen by an average of 2.3 million sq ft per year for the past six years, with the supply of new and refurbished office space falling at the fastest rate – down by over 40 per cent in the past 12 months alone.
Overall, DTZ has found, there is currently just 3.4 million sq ft of high quality office space available.
The problem is a London-wide issue, but it is most acute in the City where the proportion of new and refurbished office space available is now lower that the West End, where space has long been at a premium.
On a positive note for firms seeking London office space, development activity is on the rise, although demand will continue to exceed supply in the short term and rents are expected to reflect this imbalance.
Commenting on the findings, Alistair Brown, Senior Director at DTZ, said: “There are currently around 15 businesses, mostly in the tech, media and finance industries, actively searching for more than 100,000 sq ft – and there are just six buildings that offer that space.
“As a result of these supply and demand conditions, we expect prime rents in the City and West End to increase by more than 10 per cent this year.
“This will be the highest growth since 2010 when the commercial real estate market bounced back after two years of negative growth post the global financial crisis.
“As businesses in London continue to expand and upgrade their headquarters, we will see competition for the best quality space to intensify, leading to an even more active pre-letting market.”
