Occupancy levels continue to rise across Central London offices

Colliers research says competition for Grade A space will remain key driver of rental uplift

Article posted: 21 Jul 2011

New research from Colliers International has shown that net stock absorption of office space in Central London reached 1.8m sq ft in H1 2011, resulting in a rise in occupancy across all core locations.

The market for office space in the West End saw six month occupancy rise at its fastest rate since pre-credit crunch in H2 2005 and now stands at 94%. Grade A absorption remains strong but H1 2011 shows levels moderating, primarily due to below average take-up of office space in the City.

Central London availability fell to a 30 month low driven by a fall in Central London Grade A availability of 17% in the past 12 months. In the West End market, Grade A availability has seen an even sharper decline over the past year, down by 55%. However, take-up of top quality product has begun to peak due to the lack of new space being delivered onto the market. The Central London office market saw quarterly take-up rise by just 7%, as overall availability fell by 10%.

The lack of availability of Grade A stock is starting to have a significant impact upon headline rents, specifically across the West End market. Some locations have already are seen double digit growth in 2011 to date.

While competition for Grade A space continues to drive up headline figures, the second-hand market is also beginning to see significant falls in vacancy as cost-conscious occupiers look for alternative options in the core locations. Second-hand availability is down by 19% since the start of 2011.

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Posted by Sam