Vacancy rates 12th August 2011

According to latest figures issued by Cluttons, leading property consultants and chartered surveyors, the steady decline of vacancy rates, coupled with plans to decommission office space for conversion into residential use, will see occupiers in London's West End continue to struggle to secure space. As the Government consults on proposals to allow commercial property to be converted into residential use without the need for further planning consent, Cluttons revealed that availability has fallen for the third consecutive quarter, dropping 7.2% to 3.22 million sq ft. Cluttons has predicted that, as options for occupiers continue to be challenged, Grade A rents will grow by an average of 5.8% per annum over the next four years. Peripheral areas will also see increased activity as businesses struggle to contain costs. The research found that the restrictions in supply have encouraged developers and funds to get speculative development underway, however long lead times are unlikely to ease the tough market conditions. John Wood, Head of Commercial division, Cluttons, commenting on these latest figures, said: "Despite maintaining momentum over the last quarter, West End occupiers are struggling with the lack of space available and this is not set to ease in the near future. Only two schemes completed this quarter and, despite a 12% increase in space under construction, there is nothing underway in St James's, a highly sought-after area. "It is with this in mind that we need to consider the consequences of the proposed relaxation of the rules regarding the conversion of commercial space into residential and what this might mean for occupiers who are already seeking to move to areas on the outskirts of the West End."