Office space supply shortages in London are set to send rents spiralling, a study predicts.
According to the latest Crane Survey conducted by Drivers Jonas, the amount of office space undergoing construction has fallen by 48 per cent over the last 18 months.
This slowdown is set to be so marked that the property consultancy forecasts that by 2011 the number of new commercial buildings completed will hit its lowest level for 30 years.
Furthermore, the consequent shortage of office buildings for rent will drive rents up by as much as 15 per cent.
Matthew Elliott, head of transactions for Drivers Jonas, said that landlords had detected the change in the market and were already beginning to demand higher rents.
He commented: “Where are the next big buildings for Deutsche Bank, Bloomberg and others? With so few large buildings available, major occupiers are going to have to pay significantly higher rents to persuade a landlord to build one for them.
“For the best space, landlords are starting to feel bullish and are trying for higher rents and lower incentives.”
Over the last 12 months the slowdown has meant that work begun on just 12 new office developments in central London. By way of contrast, at the peak of the market this figure stood at 61.