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According to new figures, take up of London office space is on the increase. BNP Paribas Real Estate says that the take up of executive office space in London is greater in the third quarter of the year than it was in the second, but also that it has surpassed the amount of take up in the same time period last year. BNP also says that rents for office space have likewise risen in the London area in all subsectors of the market.
2.05m square feet of executive office space has been taken up in the third quarter of this year, a rise of forty percent in the rate of take up from the second quarter and of thirty seven percent from the usual quarterly take up average. The price of rent for commercial property in London has likewise shown strong growth, rising to fifty two pounds fifty pence per square foot at the end of the third quarter in comparison to the forty three pounds fifty per square foot which high end markets were charging renters at the close of last year.
In particular, BNP Paribas Real Estate singles out the West End of London as being an area that has shown a particular degree of sustained activity, with take up for the third quarter of this year reaching nine hundred thousand square feet of office space, which, while actually a little down on the nine hundred and forty thousand square feet of office space which was taken up in the year’s second quarter, is still a considerable improvement on the seven hundred and ten thousand square feet of office space which was taken up in the third quarter of last year. Most other areas have also shown increases, although the take up of office space in Midtown remains relatively static, with two hundred and eighty thousand square feet of office space being taken up in both of the last two quarters, while the take up rate has actually decreased in the Docklands, falling from a take up of two hundred and eighty thousand square feet of office space in the second quarter of this year to just a hundred thousand square feet of office space in the most recent quarter. Nonetheless, in general, things look to be up on the up.
“With the exception of Docklands, all of the Central London markets have outperformed both the five year average and the equivalent quarter last year,” says Dan Bayley, the head of Central London offices at BNP Paribas. “Rents are starting to move upwards on the best quality space, however tenant demand remains unpredictable and compromised buildings remain challenging to rent… We expect to see prime rents increasing in the foreseeable future as vacancy rates continue to fall. The fact that there are new London occupational requirements from recruitment consultants bodes well for increased headcount and therefore take up in Central London occupiers.” The industry will be waiting to see just how the rates change in the fourth and final quarter of 2010.
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