Despite the partial paralysis felt in the City market in Q4 of 2001, the City has witnessed an increase in letting activity. International Property Consultants, King Sturge, states in their latest City Office Bulletin that total take-up for Q1 2002 amounted to 54,500 sq m (586,400 sq ft) a 46% rise on Q4 2001.
This has been hailed as a promising start and, whilst figures are down from last year, the market has demonstrated resilience throughout the recent spell of uncertainty.
Rupert Perkins, City office agency partner at King Sturge said, â€œCorporate confidence was shaken to its core last year, and the slow start to 2002 reflects this. We can now see confidence returning to certain sectors and we can look forward to a more active market.â€
Other findings of the bulletin states that availability currently stands at 432,100 sq m (4.65m sq ft) with the vacancy rate at 7.2% compared to 2.8% in Q1 2001. Although this is an increase in availability of 14% on Q4 2001, it is less than the 40% increase between Q3 and Q4 2001, when uncertainty post September 11th was at its highest. The reducing growth in availability is a good sign. The main component of the market is again second-hand space at 63%, with units between 1,000 sq m â€“ 2,500 sq m being the most prevalent size of space available at 33%. The surge in second-hand space is due to the increase in occupiersâ€™ disposals as tenants reduce liabilities by off-loading excess space.
Investment activity totalled Â£322 million this quarter. Whilst significantly down on any quarter last year, the figure is not as worrying as it might appear. With low interest rates, property still offers strong performance in an asset class with low volatility. There are currently Â£1.25billion deals under offer or in solicitorsâ€™ hands. It is expected that the early weeks of April will show a surge in activity as investors attempt to avoid the Governmentâ€™s Budget announcement to close Stamp Duty loopholes.
(source: King Sturge)