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The debt crisis in the Eurozone is having an impact on the office rental market in London, with few companies intending to expand into new properties in the City, according to at least one leading property developer.
The chief executive officer of Great Portland Estates, Toby Courtauld, has warned that the consequences of the sovereign debt crises in Italy and Greece will certainly affect short-term rental values, with many tenants holding back from signing new contracts. “Demand from tenants is looking a bit softer than it was four months ago”, Courtauld says. “But there is not a lot we can do about what is going on month to month and we are optimistic about the next three years.”
Until just recently, the large amount of capital coming from overseas investors was pouring into the prime commercial property market of the City and helping Great Portland Estates, which is very much focused on London, to be able to weather the economic downturn better than many of its rivals that are spread further across the United Kingdom. The jitters in the Eurozone however have slowed the development of new office space, with the already insipid bank financing market having become further constrained as a result. “The supply of offices is one of the tightest we have seen”, Courtauld notes. “If we return to normal levels of demand – which are not a long way off – we will have a landlord’s market.”
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