Return of pre-lets stimulates Central London take-up: CBRE

The Central London office market saw take-up levels rise well above trend in the third quarter of 2010, according to a new research report from CB Richard Ellis. The market saw the return of large pre-letting deals, which boosted take-up to 325,000 m2, 27% above the previous quarter, and an increase of 12% above the long-term average.

Supply was squeezed to 1.4 million m² at the end of Q3, fuelled by large falls in the availability of second-hand space and led to a sharp increase in prime rents in the City and Midtown markets. Availability across the market as a whole is now nearly 557,000 m² lower than in the most recent peak at the end of Q2 2009.

According to the CB Richard Ellis prime rent index, annual rental growth in the City was 19.2% , the largest of any Central London market. The West End grew by 8.5% in the same period, and the Docklands by 4.2%.

With only 10% of the 370,000 m² of completions to be delivered during the last quarter of the year, there is little sign of supply problems easing, and a rapidly diminishing completion rate of 1.6m sq ft is expected in 2011 and 2012, CBRE said.