Q1 2011 sees 6% growth in demand for Central London office space

Jones Lang LaSalle reports reversal in trend of 2010 where demand levels fell

Article posted: 24 Mar 2011

Total occupier demand for office space in London increased by 6% in the first quarter of the year, accordingly to preliminary figures issued by real estate advisory firm Jones Lang LaSalle this week. This reverses the trend of 2010 where demand levels fell as relatively few new requirements emerged.

Compared to the last quarter, there was a 12% increase in take up of office space in the City of London to 7.8m sq ft which represents the first increase since June 2010. Total occupier demand for office space in the West End increased by 11% to 4.3m sq ft.

Jonathan Evans, Head of West End Agency at Jones Lang LaSalle said: “While the increased demand for London office space further demonstrates how strongly the market has recovered since the financial crisis, there is a growing imbalance between quality supply and increasing demand for Grade A space across London. As the development pipeline continues to deplete, upward pressure on rents will only get stronger during the rest of the year. During the next six months the West End market will definitely see prime rents in the core consistently surpassing the £100 per sq ft mark.”

While prime rents remain stable in the City at £55 per sq ft, there was a 4.5% increase to £92.50 per sq ft in the West end, where the service sector dominated take-up, accounting for 58% of the 540,000 sq ft let. In the City 630,000 sq ft was let with the Banking and Finance sector was responsible for 33% of total volumes.

In London’s office investment market £2.1bn has been transacted since the start of the year, a 28% increase on Q1 2010. The West End market accounted for £992m, while the City reached £1.1bn, an 83% increase on Q1 2010.

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Posted by Jules