Central London Office leasing market defies economic conditions

London, 11 October 2011 –Central London office leasing activity has continued on an upward trajectory as the volume of transactions across all markets rose above one million sq ft for the first time this year in September, according to latest research from CBRE. This level of activity has pushed office market take-up for Q3 2011 to 2.7 million sq ft, the highest quarterly total of the year so far. This compares favourably with the 2.2 million sq ft of office space leased in Q2 2011, although that is down on the 3.5 million sq ft recorded for the same period last year.

While only four deals over 20,000 sq ft were transacted in September, the month’s office leasing activity was defined by a large number of smaller deals. Office take-up rose in the three largest Central London office markets, with the City increasing to 337,300 sq ft and Midtown rising sharply to 157,000 sq ft. September also saw the West End witness a significant jump of 46% to 406,900 sq ft when compared to the previous month, owing to Debenhams’ decision to take 145,000 sq ft at British Land’s 10 Brock Street, the only pre-let in September.

Digby Flower, Executive Director, CBRE, said: “Weak economic conditions and concerns about the eurozone debt crisis have been a significant constraint on leasing levels. However, a second consecutive month of strong leasing activity in Central London has been very good news for the market.”

Key leasing transactions in September included:
•Debenhams – 145,000 sq ft at 10 Brock Street, NW1
•BAT Industries – 58,500 sq ft at 4 Harbour Exchange Square, E14
•Google – 25,400 sq ft at 4/5 Bonhill Street, EC2
•Tate & Lyle – 24,900 sq ft at 1 Kingsway, WC2

Due to a reduction in space under offer in all markets except the City, levels of office space under offer continued to fall in September and now stand at 15% below the most recent peak in June. However, at 2.7 million sq ft, they are still significantly above trend.

Monthly report October