Knight Frank: Rise in Central London office take-up (UK)

The central London office market has experienced rising take-up in Q3 09 suggesting the rally recorded in Q2 has extended and gained momentum, according to Knight Frank which today released its Q3 09 provisional figures for the City and West End office markets.


  • City take-up increased by 80% quarter-on-quarter to 1.8 million ft² (approx. 167,225 m²). This is the largest recorded quarterly take-up for two years in the City, and ahead of the long-term average of 1.6 million ft² per quarter
  • City availability rose by 4.5% to 14 million ft² although Knight Frank forecasts the peak for City availability will now be reached in the next three to six months
  • Strong activity by Asia Pacific financial groups, and insurance firms, has supported the market
  • City prime rents are forecast to rise by 4% in 2010 to £44.00/ft² having fallen 21% in 2009 to £42.50/ft²
  • West End take-up recorded a quarter-on-quarter rise of almost 50% to levels in excess of 800,000 ft² – the highest quarterly take-up figure for 12 months
  • West End take-up is still below the long-term average of 1.3 million ft², although there was a notable up-tick in activity towards the end of the quarter
  • West End availability remained static at 8.6 million ft² showing a vacancy rate of 9.6%. Knight Frank forecasts that availability is at or near its peak
  • Having fallen 30% in 2009 to £65.00/ft², West End prime rents are forecast to remain at this level until the end 2010 where a rise of 3% to £67.00/ft² is forecasted.

James Roberts, Head of Central London research, Knight Frank said: "These figures are certainly better than one would have expected back in the spring, and it looks like the market is now through the worst. We are not out of the woods yet, but given the encouraging economic news over the summer months, particularly in the financial markets, I think this is the start of a move back to normalised market conditions."

Will Beardmore-Gray, Head of City leasing, Knight Frank said: "We currently have 14 million ft² of availability in the City, yet the long-term average for take-up is 6.6 million ft² per annum, and the development pipeline is set to drop off next year. Just 1.3 million ft² of speculative development will complete in 2010, so we only need a return to an average market to put a considerable dent into supply."

Tim Robinson, Head of West End leasing, Knight Frank said: "The recovery in the West End has been more gradual than the City, but we have definitely seen momentum build through August and September. We have seen a fillip in demand from a diverse range of tenants including financial firms and retailers – neither sectors I expected to see much of this year. We are even experiencing competition for some our letting instructions."

Bradley Baker, Head of Central London tenant representation, Knight Frank said: "It looks like the window of opportunity for a tenant to secure the very best deal is narrowing, although the market is still in their favour for now. I think supply could dwindle rapidly for large units of new build space in the next 12 months, and in 2011 and 2012 options for quality space will likely be limited due to the lack of recent development starts."

Source: Knight Frank

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