London commercial property bounces back
The London commercial property market is said to be turning a corner this week. As the third quarter comes to a close, demand for prime London offices are on the up, and property agents have warned that increased demand will start to push rents back up.
In a report by Cushman and Wakefield, James Young, head of the agent’s City office, said:
“There has been a real sea change in sentiment in the market over the last three months. We have seen a pick up in activity from occupiers. This improving demand, coupled with a constrained supply pipeline beyond next year, means that the bottom of the market for prime space has been reached.”
In 2009’s third quarter, Cushman and Wakefield say that take up of office space across the main West End, City and Docklands markets will have increased by 64% on the second quarter, which is also more than double the take up seen in the first quarter of the year.
Prices on prime office space have also reportedly bottomed out. Cushman and Wakefield now expect prime rents to start increasing from the second half of 2010, which could see less generous incentive packages offered by landlords. This is expected to bring a significant boost to developers, landlords, and to the market as a whole.
Guy Taylor of Cushman and Wakefield’s West End office said:
“It’s been a tenants’ market for the last 12 months and landlords have been eager to offer unprecedented rent free periods. Over the next few months this imbalance is going to be redressed. In 2010 vacancy levels on prime space are going to fall and rent-free periods will reduce correspondingly.”