London office space in strong demand

It has been reported that the commercial property rental values in London are recovering, nearly 9 months earlier than forecasted. It is good news for the capital, however, according to international property consultants and chartered surveyors Cluttons LLP, the recovery in the rest of the country is lagging.

In 2009 prime rents fell in most major provincial city centres in the UK by 5-10%, with Birmingham experiencing a 15% fall.

The factors behind London’s recovery (particularly the West End and City) are improving confidence in the capital’s financial markets and the services sector. In the City of London, headline rents have gone back to £49 per square foot against a low of £42.50 per square foot in the third quarter of 2009. This equals a 15% increase in the last 6 months.

The commercial property adviser CB Richard Ellis (CBRE) has also reported an increase in office rental take-up in the City of London for the beginning of 2010. The take-up during the first quarter of 2010 was the highest recorded since the year 2000.

According to CBRE research, 2.04m square feet of office space was taken up during the first quarter of 2010. Tenant demand has remained very strong in the City of London.

As Knight Frank reported earlier this year, the take-up of Central London office accommodation more than doubled in the first quarter of 2010, compared to the same period a year ago. The first quarter of 2009 is considered the low point of the market downturn.

The forthcoming UK General Election on the 6th May might slow the market down briefly, as there would be an anticipated wait for the period of political uncertainty to pass.

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