As occupiers of grade A, West End office space attempt to deal with the current global economic situation with second-hand deals, the stability of high-end rents is threatened.
A report by Strutt and Parker shows the amount of second-hand grade A offfice space in the West End has increased by a shocking 250% since the start of last year.
The company’s West End ‘What’s Hot and Not’ report shows that 260,641square feet of second-hand grade A office space was available in the first quarter of 2007 while in the third quarter of 2008 this figure had risen to 653,753 square feet.
The figures for available new office space in the West End do not show a comparable increase, with 656,044 square feet available in 2007’s quarter one growing to just 775,577 square feet in quarter 3 of this year.
This steep rise in the amount of second-hand office space available on the West End market puts high rents in the area at risk. Though the average office space rent in the area is still over £100 per square foot, the flood of second-hand office space adds to pressure t see these rates drop.
The Strutt and Parker report says: “The volume offered by tenants constitutes 68% (443,155 sq ft) of total Grade A second hand availability. Needless to say, this undoubtedly reflects the impact of the wider economy on West End tenants and the further implications on vacancy rates. This trend is expected to continue as more tenants bring surplus accommodation to the market.’
Tags: Strutt and Parker