Take-up of central London office space increased by 26 per cent in the third quarter, a report on the property market has found.
The market for office space in the heart of the capital put in its strongest performance of the year so far, CB Richard Ellis (CBRE) found, with a total take up of 2.7 million sq ft. Take-up continues to lag behind the 2.9 million sq ft 10-year average for central London and has been below this level for the last three quarters.
The City enjoyed the largest increase in take-up, improving from 744,000 sq ft in the second quarter to 900,000 sq ft in the third quarter, while almost all other areas of central London posted increases. Take-up rose by 181 per cent in the Southbank to reach 200,000 sq ft, while the Docklands experienced a remarkable increase of 1155 per cent to hit 400,000 sq ft over the third quarter.
However, a drop in newly-completed space in the West End resulted in it recording take-up lower than one million sq ft for the first time since the third quarter of 2009. This drop may have been caused by a lack of demand in the banking and finance sector, which accounted for 18 per cent of the take-up in the third quarter. It had accounted for 41 per cent of take-up last year and averages 29 per cent over the last decade.
CBRE central London managing director Adam Hetherington said: “While take-up has been generally weak throughout the year, the jump in leasing levels across almost all central London markets over the third quarter has been a positive sign. However, it’s clear that the London office market has not escaped the deterioration in economic conditions and the lack of confidence amongst businesses has meant that occupiers are more cautious about making real estate decisions.”
Some 1.1 million sq ft of office space was recorded as being under offer in the third quarter, on a par with the long-term average. Meanwhile, prime rents remained stable across all areas of central London, with City and West End prime rents sticking at £55 per sq ft and £92.50 per sq ft respectively.
The figures suggest this year could be one of the lowest for development completions on record, with just 1.7 million sq ft scheduled for completion.