According to Peter Richards, National Head of Offices at King Sturge, London office rental growth slowed to 6.5% in 2001, down from 16% in 2000, and this decline is forecast to continue with zero growth expected in the coming year.
In the West End market, King Sturge prime rents will remain largely unchanged at between £75-£80 ($108-$115)per sf. The firm expects take-up in 2002 will return to its average level of 3.5 million sf per annum, down from over 5 million sf in 2000.
And in the City of London market prime rents will again remain broadly unchanged at between £60-£65 ($85-$95) per sf. City take-up is expected to slow down to 3.5 million sf in 2002, against a peak of 7.3 million sf in 2000.
However, outside London the south will perform better than the north of the UK, and King Sturge forecast that rents will grow on average by 1-2%. The represents a marked slowdown from 2001 when some regional centres such as Southampton; Glasgow and Swindon) all saw around 15% growth and Newcastle city centre topped the growth charts with a 20% rental uplift.
Richards also detects a trend towards larger deals in the provinces. Last year Royal bank of Scotland pre-let RBS pre-let 450,000 sf in Manchester and the Meterological Office signing for over 387,500 sf, and Richardson said more deals for similar amounts of space are about to be announced, possibly later this month. 'I'm sure trend will continue into this year,' said Richards. 'The main regional markets continue to provide the opportunity for corporates to occupy cost effective space and attract quality staff.'
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