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The rate of take ups of executive office space in the West End of London area known as St James has doubled over the course of the last twelve months. That’s the conclusion of BNP Paribas Real Estate, anyway, which says that more than two hundred and fifty thousand square feet of executive office space has been leased out over the course of the first quarter of this year, an increase of no less than one hundred percent on the take up of office space recorded last year in 2009. While this is still some way – around thirty percent, in fact – of the peak rates that were recorded three years ago back in 2007 – it is still a major improvement, with prime rents now reaching as high as eighty five British phttp://cms.totallyplc.com/content/content_add/ounds per square foot. Given that it is predicted that the take ups will only continue to rise for the rest of the year, prime rents are also being predicted to rise even more, possibly up to as much as ninety pounds per square foot by the end of 2010.
“There has been a sharp rise in demand in the last twelve months, with fifty percent of available space let during the first half of 2010,” says the director of West End agency at BNP Paribas Real Estate, Mark Hickmott. “It is anticipated that this upward trend will continue for the remainder of the year with prime rental values forecast to rise to ninety pounds per square feet due to a lack of good quality supply.” Hickmott goes on to say that “Much of the demand for offices within the St James area has been from the banking and finance sectors who have accounted for thirty one percent of the acquisitions in the last year, with the majority of occupiers requiring space of circa five thousand square feet.” One possible downside to this development, however, as Hickmott admits, is that “We expect that available space will continue to contract as there is very little stock scheduled to complete in the short to medium term. “That said, “There are two significant imminent schemes – a one hundred thousand square feet mixed use development at 210 Piccadilly which will develop fifty seven thousand square feet of offices in 2013 and 5 & 6 St James Street which will see a further a hundred and fifteen thousand square feet brought to the market in 2014. Westminster’s program of road improvements around the St James area will provide greater access for occupiers, pedestrians and road users, (which) will also serve to foster and promote future development… The St James office market provides a great number of opportunities for delivering new, high quality stock… Demand continues to increase and supply restrictions will translate to reduced vacancy rates, which will contribute to further rental increases”.
Falling under more negative news is that the same research revealed that investments have also fallen in the last year, with transaction volumes being particularly badly affected, having fallen by around fifty percent in total.
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