City Office Space to Halve in 2011
The Telegraph has today reported that commercial agent DTZ expects the level of new and refurbished office space in the City of London to halve in 2011, resulting in rising rents and increased competition amongst those businesses seeking to secure office space within the City.
While in 2010 the amount of office space completed in the City of London totalled 2.5m sq. ft., in 2011 this is expected to tumble to just 1.3m sq. ft. as the legacy of a stalled development pipeline, which first began to clog at the beginning of the 2008 financial downturn, begins to take told.
Despite a scramble in recent months to kick-start many of the planned (but stalled) office developments within the City of London ΓÇô namely the Walkie Talkie Tower and the striking ΓÇ£CheesegraterΓÇ¥ ΓÇô the development ΓÇ£gapΓÇ¥ left by the financial crisis means that large amounts of new Grade ΓÇÿAΓÇÖ Office Space will not begin to appear until at least 2014.
“Pre-letting will be crucialΓÇ¥ explained Alistair Brown to the Telegraph, Director of DTZΓÇÖs office agency team.
ΓÇ£not only because there will be a shortage of grade A space, but also because large units suitable for major occupiers are going to be in especially short supply.”
The issue of reduced supply levels has not only been making itself heard in the City, with commercial agents Savills also highlighting this ΓÇ£ChallengeΓÇ¥ across many of the UKΓÇÖs regional office markets. Following a similar pattern to the City, moth-balled office developments have begun to spring back to life ΓÇô such as Two Snow Hill in Birmingham ΓÇô but will again not become available until post 2012/13.
So with limited availability and increased competition looking to be the ΓÇ£StandardΓÇ¥ in 2011, will the UK lose out to the worldwide office market as corporations turn to the likes of Asia in order to fulfil their office space needs while the blockage is cleared? Or will the geographical and structural advantages that the UK offers be enough to encourage them to wait?