11 April 2013
Figures released today in Capita Symonds’ ‘Central London Overview Q1 Report’ show that the central London office market got off to a quiet start in 2013.
http://www.capitasymonds.co.uk/news__events/latest_news/quiet_start_to_2013_for_centra.aspx
Amid continuing economic uncertainty, the first quarter of 2013 saw a fall of 16% in take-up across the whole London market set against the same quarter last year, slipping from 2.7 to 2.3 million sq ft.
Take up levels in the core City and West End markets were also significantly lower when compared with Q4 2012; showing falls of 70% and 46% respectively.
However, with economic indicators around the world turning more positive in recent weeks there are renewed hopes that business confidence will begin to return and stimulate more activity in the London office sector in 2013.
Whilst the traditional core markets continue to be impacted by a constrained financial sector, industries such as oil, gas, legal services and insurance have joined the much commented TMT sector in driving London’s occupier market. The insurance sector remains the bright spot in the City market bolstering EC3 with several large deals in Q1 including RSA and Liberty Mutual Insurance both taking space at 20 Fenchurch Street. The continued importance of the TMT sector was further underlined by Google’s acquisition of 800,000 sq ft at King’s Cross and rumours that Amazon is under offer on over 200,000 sq ft.
With take-up subdued, the supply of Grade A space appears sufficient at present to restrain upward pressure on rents in the traditional core markets.
Rhodri Phillips, Divisional Director Agency for Capita Symonds
"It is anticipated that once greater confidence begins to filter through, the market will move quickly in the light of growing pent-up demand from companies with planned moves on hold. Larger floor plate buildings in certain locations are already in limited supply, so occupiers could find themselves suddenly in a much more competitive market for space once the shift materialises.”
Some retreat from the scale of investment activity was always likely in 2013 due to the constrained supply of investment stock and the reluctance of investors to sell as sterling remains attractive.
Andrew Mercer, Director of Investment for Capita Symonds
"Although we have seen investment levels well below the long term average of £2.7 billion in Q1, this is not at all representative of a lack of confidence in the London market. International interest in London remains very strong with many potential investors competing for limited opportunities. This sustained downward pressure on yields could encourage more opportunistic sales later in the year”.
To see the full report click here
http://www.capitasymonds.co.uk/news__events/latest_news/quiet_start_to_2013_for_centra.aspx
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