London's key office markets of the West End, City and Docklands have returned to significant growth in the first three months of 2010 as companies have moved quickly to take advantage of relatively low rents and the gradually dwindling supply of best quality space.
London's key office markets of the West End, City and Docklands have returned to significant growth in the first three months of 2010 as companies have moved quickly to take advantage of relatively low rents and the gradually dwindling supply of best quality space.
New statistics from real estate advisor Cushman & Wakefield, show that 3.1 million sq ft (288,000 m2) of office space was taken up across central London, the highest figure since Q4 2008 and 330% higher than the same period in 2009.
Cushman & Wakefield believes that the best start to a year since 1998 could now encourage developers to push ahead with the development of new landmark office buildings, albeit that many will require pre-lets in order to secure funding.
The capital's good performance was evident in the City & Docklands markets where over 2.1 million sq ft was leased in the first three months, a five-fold increase on Q1 2009 and a 16% increase on Q4 2009. The figure is well above the 10-year quarterly average of 1.5 million sq ft and is equivalent in size to almost four ‘Gherkins’ being taken off the market. Major deals included Blackrock taking Drapers Gardens and Macquarie signing on British Land’s Ropemaker.
The demand for space in the City has provided a welcome fillip for developers with rents on prime office space rising 13.6% in the quarter to stand at £50 per sq ft - a level last seen in Q4 2008. The amount of space available to lease has returned to the Q1 2009 level at 12 million sq ft, down 7% from 12.8 million sq ft in Q4 2009. The vacancy rate across the City & Docklands has now dropped from 8.25% to 7.7%.
