Take up in the Central London leasing market showed a second consecutive quarter of low activity, according to new data from Capita Symonds.
Central London office take-up in Q2 2011 was below the historic quarterly average of 3m sq ft for the second consecutive quarter. Take-up in the City was revealed to be down by 22% over the previous quarter to 605,000 sq ft and down 36% on the 949,000 sq ft in same quarter last year.
The West End’s take-up fared better, but was down on the previous quarter by 9% to 722,000 sq ft and reflected a 35% reduction from the level achieved in the same quarter in 2010.
“Although it is too early for this to be called a trend, it is evident that businesses are staying put and the office market is biding its time,” Alan Dornford, director-markets at Capita Symonds, said. Dornford also explained that London “inevitably reflects what is happening in the wider world and there is increasing evidence of a slowing world economy.”
He also said that the impact of high oil prices and the Eurozones crisis on top of this causes caution in boardroom, which translates into reluctance within buildings to move, invest, or take on new staff.
The figures come after two years of high activity driven by business upgrading space and capitalizing on inducements on offer from landlords. As supply has shrunk and landlords have adjusted their pricing, the options for businesses looking to move have reduced and the financial case isn’t necessarily as compelling as it once was. The market is therefore now much more dependent on growth in the economy which includes new businesses coming into London and existing businesses adding more staff.
Rents in the city are currently in the region of £55 per sq ft, up 4% since the beginning of the year. In the West End, higher rents are being achieved, but very few have been achieved above £70 per sq ft.
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