Take-up of central London offices increased by nearly a third in the latest quarter, from around 2.5 million sf to around 3.25 million sf. Over the first three quarters of 2001, take-up is now only 11% lower than over the first three quarters of 2000, which was itself a record high year. However availability has risen to 6.1% from 4.1 % in Summer 2000. But GVA Grimley points out that this is still low by historic standards: in the early 1990s availability reached 20%.
'While this scarcity of supply has undoubtedly been an important factor in keeping availability low and holding up rental values, take-up rates also indicate that demand has remained strong,' said Nick McCalmont-Woods, office agency partner at GVA Grimley.
Prime rents are now static in all three main sub-markets at sub areas, at £79 ($116) per sf in the West End; £65 ($95) in the City and £45 ($66) per sf in Docklands. The rate of rental growth has slowed every quarter since peaking in late 2000.
Stuart Morley, head of research at GVA Grimley, forecast: 'While we expect the London office market to experience more difficult times over the coming months, the third quarter figures show us that the market is fundamentally stable. While take-up will weaken, the continuing lack of supply of large Grade A office space should keep the market relatively healthy and prevent any significant adjustment in rental values.'
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