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London Office Market Will Survive Global Downturn, Forecasts Insignia

LONDON-The Central London office market proved resilient in the face of the global slowdown over the first half of 2001 according to Insignia Richard Ellis. But the broker says market prospects are more uncertain after 11 September.

By Graham Parker | Updated on September 25, 2001

LONDON-Office take-up slowed in the first half of 2001, according to the latest ‘Central London Office Market Outlook’ report from Insignia Richard Ellis. But while London is set to weather the storm, the broker says that market prospects are now subject to greater uncertainty after the events of 11 September.

Office take-up in Central London over the first six months of 2001 totalled 8.2 million sf, down 9% on the equivalent period of 2000. However pre-letting activity remained strong, accounting for 44% of the all space absorbed in the first half of the year. And this trend persisted into the third quarter with major deals at Paternoster Square in the City, Paddington in the West End and Canary Wharf in Docklands.

The availability of second-hand office space has risen sharply through 2001, but new supply remains very limited. At the mid-year point, Central London’s overall vacancy rate was only 3%, with just 4.4 million sf of available floorspace under construction. Reflecting this tight market, prime office rents in the City have continued to rise this year although the top rent in the West End has remained static at just over £80 ($117) per sf.

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