London businesses facing office space shortage

Capita Symonds report reveals worst Grade A office space shortage since the 1980s

Article posted: 08 Apr 2011

Figures released by Capita Symonds’ real estate division have revealed that the commercial property market is set to face the worst shortage Grade A office space in Central London since at least the 1980’s due to a dearth of both new developments and prime stock.

As a result, rents for offices in London are set to rise rapidly over the next two years with headline rents set to reach £100 per sq ft for office space in the West End and £65 per sq ft in for office space in the City by 2013 (currently £70.00 per sq ft and £55.00 per sq ft respectively). Over the last year alone rents for office space in some parts of central London have risen strongly, including 18% for offices in Midtown and 16% in the City.

James Gillett, director, Capita Symonds’ real estate division says: “Two years ago this situation would have been unthinkable. Companies were in a great position with a surplus of good space resulting in aggressive financial offers from landlords desperate not to lose tenants. For businesses looking to move, those days have passed - the boot is firmly on the other foot.

“Consequently, occupiers need to consider their options very carefully. Some may be tempted to seek lease extensions for the next two to three years in the hope that supply line will improve. Others may look to move all or part of the business outside the central areas, which could be good news for the Southbank and Midtown as well as more fringe locations offering good quality stock such as Stratford, Greenwich and King’s Cross.

“Those who took the plunge and invested in the central London office market over the last eighteen months have good cause to celebrate. The dearth of high quality office space which has been so key to driving up values and rental levels in central London is set to remain.”

For a full copy of the report click here

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Posted by Sara