London office space 10th July 2014

The availability of office space in Central London is at its lowest point since Q1 2008 according to the latest Central London Office MarketView by CBRE.

Take-up rose by 28% over the quarter, making Q2 2014 the second most actively transacted quarter in the Central London office market since the end of 2010. Take-up in Q2 2014 was 15% higher than in the corresponding period in 2013.

Both the City and the West End saw high levels of activity, with the West End achieving its most active quarter for over four years, boosted by a 140,500 sq ft letting at 1 Fitzroy Place to cosmetics giant Estée Lauder. The largest deal to complete in Q2 2014 was at 2 New Ludgate in Old Bailey, where the Japanese bank Mizuho took 195,300 sq ft.

Central London availability continued to fall in Q2 2014, ending the quarter at 13.17 million sq ft, marking a six-year low, 26% lower than at the same point last year. A 6% fall in availability in Q2 2014 compared to the previous quarter caused the Central London availability rate to fall to 6.3%, down from the 7.1% in Q1 2014.

The availability of office space is now below trend in each of CBRE’s five Central London markets. Under offers in Central London fell from a record high seen in the previous quarter, but remain 48% above the 10-year average at 4.02 million sq ft. The largest proportion of Central London space under offer is located in the City (43%).

Chris Vydra, Executive Director, CBRE said: “The latest market statistics confirm our long-standing view that the market, having turned at the end of last year after several years of static conditions, will continue to be robust. Under offers are at extremely high levels relative to trend and active demand in most sub-sectors remains strong. In addition, availability is at its lowest level since the beginning of 2008. As such, we are forecasting strong rental growth in the latter part of this year and next, with prime rents in the West End rising to £119.00 per sq ft and prime rents in the City rising to £71.00 per sq ft by the end of 2015.”