London Office Markets
4 October 2013 by Leon Pascal
UK central London office markets have entered the final quarter of the year on a tide of positive leasing and investment data published this week, with rising rents reinforcing expectations of a busy final three months of the year.
The majority of the information published on this topic used positive phrases and highlighted a shift, for example Jones Lang LaSalle suggested “the tipping point of the market is close”. This indicates a strong end to the year for this sector and a positive base for 2014.
Ben Burston, head of UK offices research, at JLL, said: “After two years of subdued take-up, market activity has accelerated rapidly in the past six months with improving business confidence leading to the release of latent occupier demand. Investors are clearly more focused on the positive outlook for rental growth and are willing to pay a premium to access stock that is well-positioned to benefit from the expected uplift.”
Stephen Clifton, head of central London offices at Knight Frank, said: “The good news from the leasing market has acted as a catalyst for demand in the investment market, drawing buyers towards properties with upcoming lease expires.
“These short income assets offer the investor the opportunity to refurbish the asset and then catch the rising tide for rents. Particularly in districts popular with tech and media firms, this is becoming a popular investment strategy, which is buoying pricing in fringe areas like Shoreditch and Farringdon.”
In total, more than 7.4m sq ft of office space in central London was leased in the first nine months of this year – a figure which is already around 165,000 sq ft ahead of 2012’s total, according to research by Cushman & Wakefield.