City and Midtown office markets see Q3 upturn

BNP Paribas research shows both areas benefitting from lack of West End Grade A supply

Article posted: 21 Oct 2011

According to the latest research from BNP Paribas Real Estate, both the markets for office space in the City of London and Midtown have seen an increase in activity during the third quarter this year with both areas benefitting from the high rents and a lack of supply of Grade A office space in the West End.

Take-up for the City totalled 1.24m sq ft during Q3 (up from 0.87m sq ft in Q2) and prime rents for office space in Midtown rose to £52.50 per sq ft, driven by traditional West End occupiers moving east taking advantage of better availability and lower rents. According to BNP Paribas Real Estate’s research prime rents in the West End remain at £100 per sq ft, almost double of those in Midtown. West End rents have increased by 18% over the past twelve months.

Commenting on the lack of office space in Mayfair and other West End locations, Dan Bayley, MD of Central London for BNP Paribas Real Estate said: “Due to scarcity of stock in Mayfair, Soho and St James’s we are seeing a number of companies, such as those in the TMT sector who would be considered as natural West End occupiers, relocating to the Midtown and City postcodes.”

“This change in occupier profile means that the Q3 figures for the City are relatively healthy and slightly higher than might have been anticipated despite traditional City occupiers adopting a wait and see policy on expansion. This nervousness is a reflection of the fragile market confidence within the banking and financial sectors.”

Recent transactions at 200 Aldersgate (pictured) and the Expedia deal at the Angel Building are good examples of this trend, where natural West End occupiers are moving to locations that were previously considered the preserve of traditional City financial services occupiers.

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Posted by Sam