Occupiers in the capital are bullish about their prospects, in an encouraging sign for developers, according to a survey from Cushman & Wakefield.
The vast majority (87%) expect business to improve or stay the same over the next 12 months and nearly three-quarters (71%) are looking for growth opportunities. Nearly four-fifths (79%) predict that their employee numbers will increase or stay the same and two-thirds (70%) expect the general UK economy to improve or stay the same over 2011.
The survey, which was carried out by Ipsos MORI, involved interviews with just under 300 large companies represented in London across a range of sectors, all with a turnover of more than £25 mln.
With an estimated 5.1 million m² of lease events - breaks and expiries - taking place in central London over the next five years, this positive sentiment should result in valuable opportunities for developers of new office buildings.
Companies in the financial and legal sector were asked whether increased regulation and taxation would make the capital a less attractive location. Opinions were split, with around half voicing the opinion that it would, and approximately the same taking the view that it would have no effect.
In terms of the most important pull factors for the capital, the availability of staff came out on top, followed by the availability of suitable premises, transport infrastructure and proximity to major customers. These factors varied in importance to companies, dependent on their sector. For occupiers in the banking sector, large efficient floorplates and location are key for attracting and retaining employees. However, the number one factor for media companies is cost and therefore a core location is less important.
James Young, Head of Cushman & Wakefield's London Group, commented: "As we hopefully move into more economically stable times, these findings show that occupiers in the capital are feeling cautiously optimistic about their own business prospects. Opportunities will undoubtedly arise through the high number of lease events, although it will be key for developers to have a deep understanding of occupiers' needs in order to entice them to move. A continued lack of development finance is likely to lead to a resurgence in the pre-letting of buildings, in order for developers to de-risk their scheme."
Source: Cushman & Wakefield