Take-up of commercial property in the City was down in the first quarter of 2011: 1.1m sq ft, down from 1.8m in the previous quarter, according to figures released by commercial property broker Colliers.
The disparity in figures is partly explained by Bloomberg’s 500,000 sq ft Walbrook deal in Q4 2010; however it is anticipated that there will be an improvement in quarterly take-up for the next three quarters, remaining close to the 1.3m sq ft ten-year average.
Total City space under offer at the end of Q1 2011 was 933,864 sq ft; 31% of this was new or refurbished office space and, representative of the current market trend towards smaller office uptake, 43% was for 10,000–40,000 sq ft premises for mid-tier occupiers. No developments over 50,000 sq ft were in the commercial property pipeline, meaning year-on-year headline take-up will be significantly down.
City Grade A availability rose by 10% quarter on quarter, fuelled partly by the Heron Tower and 200 Aldersgate developments, together comprising more than 700,000 sq ft, where units between 12,000 and 25,000 sq ft are expected to be in high demand.
Other notable deals included One New Change to Friends Provident and CME Group, and 1 Bartholomew Lane to BOCOM and Agricultural Bank of China.
These are expected to place upward pressure on rents in low and high-rise space. Prime location rents are steady at £57.50 per sq ft, and good quality second-hand space is currently being let at the mid-£50 mark but appears to be rising in Square Mile developments. However, these still require the negotiation of long rent-free periods for long leases to good covenants.
Total 2011 Central London development completions are set to be 70%, below the ten-year annual average.
The report points to tenant inertia and global influences as dictating much of the City’s commercial property market, adding that large lettings, such as the 250,000 sq ft reportedly sought by investment bank Schroders, can substantially alter a quarter’s statistics.
Previous Post
The Best Serviced Offices A Home To Plants
