The vacancy rates on London office space have risen across the board, in the largest increase the market has seen for two years according to research from Atisreal.
The report shows rates rising to almost 8% in September from 6.7% in the second quarter. Atisreal’s findings mark a year of decline in Central London’s office space investment market. A 90% fall in office space transactions in the last quarter makes the third quarter of 2008 the weakest in over a year.
With capital values in the office space market falling by almost a third in the city and a fifth in the West End, the rise in vacancy rates is being attributed to new office space developments arriving on the market.
Dan Bayley, head of national lettings and sales at Atisreal, said: ‘Despite Q3 showing take-up increases across Central London, there have been warning bells – namely the financial market turmoil following the collapse of Lehman Brothers and the downward revision of GDP to zero which suggests that the economy is on the edge of a recessionary period.’
Prime rents in Canary Warf are now down to £42.50 per square foot, while only a single office space deal was made above £100 per square foot in The West End last quarter.
The midtown office space market activity doubled in the last quarter. The result is being attributed to a ‘flight to value’ mentality amongst companies like Thomas Cook, who pulled out of a £135 per sqaure foot Mayfair office space in favour of paying £65 per square foot midtown.
Tags: Atisreal