The slowdown in the City of London office market is continuing, with take-up falling by 23% in the second quarter of 2002, according to King Sturge. The broker calculates that just 448,000 sf was leased during the second quarter.
This was compounded by a 27% increase in availability over the quarter, taking City vacancies to 5.9 million sf or 7.9% of total stock. However, King Sturge says the figures were distorted slightly because a number of deals failed to complete in time for the end of the second quarter. As a result, space under offer has increased by 35% to almost one million sf.
Looking ahead, the firm is more optimistic about the second half of 2002. It expects a number of pre-lettings, mainly from within the legal sector, to boost confidence in the market.
Rental evidence at the top of the market is hard to come by given the lack of deals, but the best rent King Sturge could find over the quarter was Â£52.50 ($80) per sf paid at 111 Old Broad Street. Quoting terms for the best accommodation remain static at Â£60 to Â£62.50 ($92 to $96 per sf). But King Sturge warns that landlords are going to have to give ground if the current imbalance between supply and demand persists.