Summer high

Far from slowing down, office demand in central London rose strongly again in August with a 13% rise in the City pushing requirements up to 706,040 sq.metres (7.6 million sq.ft.). There was a contrast with the West End, said CBRE, where demand was steady at 445,920 sq.metres (4.8 million sq.ft.). Digby Flower of CBRE said:

“However, a fourth consecutive month that space under offer has remained at or above the ten year average reaffirms our belief that the second half of the year will witness an improved picture on the first six months.”

Further research by CBRE has shown that secondary property has taken over from prime in leading capital growth. Yields on prime central London offices have stabilised but have tightened on secondary property. “Yield compression on prime property looks to have run its course,“ said Peter Damesick, EMEA (Europe, Middle East & Africa) Chief Economist at CBRE.

London commercial property remains the best performing part of the UK with Midtown outpacing the other London areas throughout the summer. Iain Malcolm of Farebrother said “Total investment transactions and occupier take up in Midtown could match, or even exceed, pre recession levels by the end of the year. Demand from a wide variety of business sectors, low supply (6% availability rate) and a modest development pipeline has driven investor interest.”

The most notable recent lettings have been at UK & European’s recently completed 1 Kingsway, where the creators of the iconic Wolseley restaurant will be opening a new 13,500 sq.ft. sister restaurant at the end of this year. Tate & Lyle has taken the top floors (24,780 sq.ft.) for its new corporate headquarters at a headline rent of £67.50 per sq.ft. a benchmark for new space in WC2 in the current cycle and John Laing has just signed up on the 1st & 2nd floors.

One part of Midtown has been transformed with the first stage of the Chancery Lane Enhancement Project completed. It has brought a host of improvements from footpath widening and repaving as well as better street lighting. There has also been tree planting and new seating.

City of London Planning Chief, Peter Rees, said: ”This long term strategy has been carefully coordinated to preserve the unique character of one of the most historic and unusual streets in the City while also making it fit for purpose as part of a 21st century business centre.”