The main drop in activity has been during the last six months, and is largely attributable to the significant cooling of the US economy, reflecting the fact US-based companies, attracted by the proximity to Heathrow airport, form a large part of the area's occupier base.
South East office agency director Mark England said that, while the changes in activity need to be placed in the context of a strong market during 2000, they are still quite marked. 'Development activity has also levelled, with very little new speculative development having started in the last six months,' he said. 'There are now 3.5 million sf of offices under construction, which will inevitably lead to further increases in supply given the current market conditions.'
However the report anticipates that activity should improve in the first half of 2003 as confidence returns.
England forecast: 'With an anticipated resurgence in output during 2003, we do not foresee a return to the problems that afflicted the market in the downturn of the early nineties, with vacancy rates currently ten percentage points below their levels of ten years ago.'
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