London office space and the credit crunch
April 6th, 2008 | by James Jones
The credit crisis affecting the banks and financial institutions in the City of London has been reflected in a sharp fall in the take-up of office space. Traditionally, approximately 40% of office space take-up has come from banks but in the first three months of this year it has dropped to below 10%.
The Australian company, Macquarie, which had been planing to locate it’s new HQ in the City has now withdrawn the requirement. The banks have been rocked by the sub-prime mortgage lending catastrophe, which lead the the collapse of Bear Stearns. Coupled with the run on Northern Rock, there is a huge amount of caution in the air, with no deals in excess of 20,000 sq feet being completed for six months.
Paradoxically, lettings fell in the West End, not due to the financial turbulence, but because of the lack of available space, with a vacancy rate of around 4%. In the City - in the short and medium term - the outlook is very bleak. With some predicting job losses totaling 11,000 in the coming years, take up is sure to suffer, exerting pressure on landlords.
However the serviced office industry, it could be argued, could still perform well under these conditions. Lets hope so.
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