London offices show strong leasing levels and falling supply (UK)

Latest research from CB Richard Ellis shows that there was no sign of a let up in tenant demand in Central London during February as take-up remained above the one million ft² (approx. 92,000 m²) mark for the third month in succession. With under offers rising in February and over two million ft² transacted for the year to date, the first quarter of 2010 will be strong.

Digby Flower, Head of Central London Agency, CBRE, said: "In Central London, landlords have already reacted to the increasingly competitive market with rents increasing over the last few months. With no sign of tenant demand abating in the short term at least, falling supply will continue to drive rental growth over the remainder of the year."

Availability in Central London continued to tighten during February having peaked at 21.3 mln. ft², in June 2009, with supply falling to 17.7 mln. ft² at the end of the month.

The absorption of new space significantly reduced availability, by comparison the amount of secondhand space on the market rose slightly over the month. Reflecting these trends, the availability rate fell to 8.1% - the lowest level since the end of 2008. Supply in the City and West End has declined to 7.1 millions ft² and 6.6 million ft² respectively.

Three deals over 100,000 ft² completed during February in Central London, the largest of which was the 270,600 signing by BlackRock Investment Management at Drapers Gardens. Australia's Macquarie Bank leased 212,400 ft² at Ropemaker and the LOCOG taking an additional 135,500 ft² at 10 Upper Bank Street, Canary Wharf. In the West End, the largest deal was by Marks and Spencer who signed 23,700 at 10 Eastbourne Terrace in Paddington.

Source: CBRE

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