Central London Office Market Awaits Upturn

LONDON-The City, West End, Midtown and Docklands office markets in London remain subdued, but according to Jones Lang LaSalle’s Q1 2004 Central London Office Market report, there are signs of an upturn. The agent reports a marked increase in viewings and also a willingness on behalf of occupiers to pursue detailed negotiations. First quarter take-up totalled 1.9 million sf a slight reduction from the previous quarter. However, floor space under offer at the quarter-end totalled 2.7 million sf, the majority of which was in the city where some major potential deals by Willis Group, Lloyds TSB and IPC Media have been announced in recent weeks. In addition the agent has identified a number of new active enquiries, and as a result active demand is now up 56% since March 2003. The vacancy rate remained almost unchanged in the city, but fell in the West End and Docklands as a result of both take-up and the withdrawal of occupier space from the market. The overall Central London vacancy rate fell from 11.3% to 10.6%. Although the rate of rental decline is slowing, but it remains a tenant’s market and landlords will still need to be competitive to secure deals. Rental growth is not anticipated until 2005/6.