Will we fill our skyscrapers? Office take-up slow but set to improve

Take up of prime central London office space in the City and the West End remains slow, according to property agents Knight Frank.

As sky scrapers keep growing across the capital, this adds more speculation as to whether there will enough businesses to fill them.

However, Knight Frank says it is confident that the spaces will be filled and said “evidence of an improving economy in Q1 will buoy demand for office space in London as the year continues”.

Tim Robinson, proprietary partner and head of West End Leasing also said that while there was currently 1.6 million square feet of construction underway in London, much of that wouldn’t be complete until 2013.

According to Robinson the average vacancy rate for office space has been eight per cent whereas now it was at six per cent.

Robinson cited businesses in the technology sector as potential tenants for available space and said: “A small drop in take-up was inevitable given the difficult economic backdrop, but we are seeing continued strong demand emerging from the technology sector, with household names like Wonga, Money Supermarket and TomTom all active.”

William Beardmore-Gray, proprietary partner and head of City leasing said:

“Typically demand for City offices time-lags events in the global financial markets by around six months. So as a consequence of the volatility we saw in the financial markets six months ago, we have seen a weakening of demand in Q1 2012 – though not to the extent that occurred in Q1 2009, when take-up dropped to just 730,000 sq ft.

“However, I believe these figures tell us where we have been not where we are going. The economic news has improved in recent months, and a number of insurance and law firms have large office searches in the City, with deals expected to go under offer in the coming months.

Consequently, we expect demand to recover as the year progresses, steadily pushing down supply.” 

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