Take-up in the City of London is expected to jump 20% to more than 4m sq ft this year as firms within the Square Mile begin hiring once again, according to new forecasts from Jones Lang LaSalle. JLL’s forecast came after lettings in the City rose to their highest level for two years during the last quarter of 2003, with take-up at just under 1m sq ft.
The announcement will be good news for the property industry after the two worst years for the City office market since the early 1990s.
A total of 64 deals took place within the Square Mile, the highest number for almost three years. In the two largest deals, Sidley Austin Brown & Wood, the US law firm, took 75,000 sq ft at Woolgate Exchange; while Royal Bank of Scotland took almost 60,000 sq ft at 135 Bishopsgate. Overall take-up in the City was 3.4m sq ft for the whole of 2003, slightly ahead of the previous year.
However, the amount of empty space in the Square Mile rose 15.7% in the fourth quarter, following several new buildings coming onto the market near the end of the year.
City office rents fell by 15% last year to an average of £48 per sq ft, and the influx of new space is likely to push them down by a further 10%, to £43 per sq ft over the first six months of 2004.
Jones Lang Salle Director of City Property, Martin Wallace, commented: “During 2003 the easiest decision for businesses to make was no decision, but companies have begun to adopt a more positive attitude.”
The West End office market fared even better, with take-up of 776,300 sq ft over the last quarter, the highest level of activity since early 2001.
However, total take-up for 2004 was a mere 2.41m sq ft, the second lowest on record, although JLL blamed the market’s poor first-half performance.
Demand for office space was up 12% in the fourth quarter to 4.61m sq ft