City of London Office Space Market
March 11th, 2008 | by Simon Rattray |How is the City of London office market performing at the moment? With all the doom and gloom surrounding the credit crunch it could be easy to assume that we are awash with empty offices.
Reality is that only about 6 - 7% of buildings are available, which is surprising considering the number of cranes and building work that seems to be going on in London. There is in fact only 200,000 square feet of completed new office space available but a whopping 2.9 million sq ft of speculative build to be made available this year.
The City of London’s headline rents of circa £65 per sq ft represent good value when compared to other parts of London. It is also a misapprehension to assume that the office market depends entirely on the banking sector, although they do make up the vast majority. Some of the latest companies requiring space are from legal firms. There are also a number of major insitutions considering their options such as Bank of Tokyo Mitsubishi, Merrill Lynch, Deutsche Bank and Standard Bank.
Recent turbulence on the financial markets, Northern Rock, sub prime loans etc mean that the rush for larger schemes may have died off for now. But with the Olympics, low unemployment, low inflation, and uninflated labour costs means that developers and investors investing in workable and flexible schemes should be able to make a decent yield though not in the proportions of recent years.
Inflexible, rushed developments, are more likely to suffer, so it will pay to build quality developments.
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