Low take-up for London offices

CB Richard Ellis (CBRE) has published its first-quarter report on the central London offices market which suffered the lowest take-up since the first half of 2009. It said demand for second-hand space largely drove take-up and accounted for more than 75 percent of the total. Space under offer increased over the quarter but, at 2.2m sq ft, this was still below the long-term average.

CBRE’s market report said central London supply fell for the seventh successive quarter to stand at 13.8m sq ft which is 35 percent below the recent peak. Only the availability of newly completed space remained above trend. CBRE said this should start to fall because the development pipeline was relatively limited. The central London vacancy rate fell to 5.1 percent, compared with 5.5 percent the previous quarter, it said.

CBRE said it expected only 1.8m sq ft of completions this year, down from 3.9m sq ft during 2010, making 2011 one of the lowest years for development on record. Although completion levels were expected to increase in 2012, it would take a further year before there was any significant rise, CBRE said.