The Central London commercial property market remains cautious, showing figures below the historic average of 3 million sq ft for the second quarter in a row according to a report released by property consultants Capita Symonds.
The figures, covering the second quarter of 2011, show office take-up in the City to be 605,000 sq ft – 22% down on the previous quarter. This is compared to 949,000 sq ft just one year ago. The West End delivered comparably better results with a take-up of 722,000 sq ft, but this is still down 9% on Q1 2011.
The report analyses the supply and demand of commercial property, noting that ‘the market has become much more dependent on new business coming into London and existing businesses adding more staff’. Attention is drawn to the 2011 figures of 1.3m sq ft scheduled for completion in the City and 380,000 sq ft in the West End. When taken together with the 2012 projections of 540,000 sq ft ‘in the core Central London markets’, these are ‘a far cry from the long run average of 3.7m sq ft’ per year.
Recent high demand for Grade A commercial property space is forecast to continue, while demand is expected to be weaker and ‘patchy’ for secondary and tertiary space.
Prospects for London are regarded as positive, bolstered ‘by its perception as a safe haven’, says Capita Symonds, which is a wholly owned division of professional support provider Capita Group.
Commercial property rents in the City are reportedly £55 per sq ft, a 4% increase on Q1 2011. There is a mention of some West End agreements coming in at £100 per sq ft, but generally the market is said to contain ‘few above £70 per sq ft’. Longer term, City and West End rents are anticipated to continue on ‘a faltering but upward trend until 2014 when new supply is expected to peak’ once again.
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