Early statistics from global property adviser DTZ reveal that the gulf between take-up and availability in Central London is significantly shrinking.
According to provisional data from DTZ Research, total take-up in 2005 climbed
to 1,29 m² across the capital, a positive increase on 2004, which achieved 1,27 m², firmly suggesting that a new cycle for the market is firmly underway. Availability now stands at around 1, 63 m², which is a dramatic improvement on the 2, 44 m² recorded in January 2005.
The West End was the year's star performer with approximately 371.000 m² in take-up compared to just 297.000 m² in 2004. The West End's largest deal of the year was the pre-letting of 14.864 m² at 55 Baker Street to accounting form, BDO Stoy Hayward. The West End also benefited form strong demand for space by the financial services sector, with major deals involving Kaupthing Bank (8730 m² at 1 Hanover Square), 3i (6000 m² at 16 Palace Street), and Alliance Capital (5950 m² at 45-50 Berkeley Street). This activity fuelled strong rental growth and overall capital values in the office sector have grown by upwards of 15%.
The City had a good year finishing on an estimated 540.000 m² of space let, a rise from 483.000 m² in 2004. Like the West End, the City has benefited from robust demand from the financial services and accounting sectors. The largest deal of the year was emerging markets bank, Standard Chartered, taking a 21.000 m² pre-let at 35 Basinghall Street, followed by Deloitte's 20.800 m² deal at New Street Square. One particular fact of note in the City is the growing interest in prestige City schemes, such as 30 St Mary Axe where in excess of 15.000 m² was let during 2005.
John Forrester, Head of Central London Agency comments: "Given the present combination of robust demand and a constrained development pipeline, this steadily improving situation in Central London is likely to continue throughout 2006. While there has been some concerns over economic conditions in the UK, in particular in regard to consumer, it is well to remember that the Central London economy is internationally facing, and is benefiting from buoyant demand for financial and professional services. Based on recent corporate trading statements and interim results, we expect the financial and professional business sectors to continue to drive the office market in 2006."