Property News Pre-lets at a high

Central London Offices

New research from Colliers International has shown that Grade A office availability remained flat, and despite pre-letting activity at its highest level for some time, quarterly take-up is still significantly down across the Central London market for Q3 2011.

Mike MacKeith, Head of Central London Offices at Colliers International commented: “The market has seen a significant increase in pre-letting activity, which is at its highest for 12 months since the UBS deal at Broadgate. Prior to that, we have to go back to Q3 2007 to see a higher level”.

Central London office availability overall has remained flat at 7.7%, the first time quarterly vacancy has ceased to fall since Q3 2009. New and refurbished space rose slightly by 5%, driven mainly by the completion of Cannon Place. However, the City vacancy rate remains unchanged at 9.5%, suggesting continued steady absorption of space.

Despite this, a shortage of new supply still remains a concern. Focusing in on the West End, new and refurbished accommodation actually declined slightly by 3% and is now down by 33% in past 12 months.

In Mayfair, total availability has taken a dramatic fall by 43% in the past 12 months.

Anticipated development completions for the remainder of 2011 across all of Central London are expected to total 292,000 sq ft, bringing annual completions to 1.6m sq ft, compared to a 10 year average of 5.4m sq ft.

The Colliers International research also revealed that in the City market 65% of space completing in 2011 still remains vacant, compared to the West End market, where 75% of space completed in 2011 to date is either let or under offer.