London’s resurgent financial sector has increased the demand for office space in the capital to levels not seen for many years, leading to warnings of rising rents and supply shortages in the course of 2015.
According to data from Cushman & Wakefield, leasing activity in the central London market reached 12.4 million sq ft last year – the highest figure since 2007.
In the City, leasing volumes hit 7 million sq ft, a figure not seen since before the turn of the century, as demand from the Square Mile’s traditional occupiers soared.
Docklands also enjoyed a good year with take-up reaching 1 million sq ft – doubling the figure achieved in 2013.
While demand remains high in the media and tech sectors, leasing activity from the rapidly improving banking and finance sectors was the most noteworthy factor in the market during 2014.
With development completions in the City expected to be at their lowest levels since before the recession this year – and pre-lets and their highest levels in a decade – rising rents and supply shortages are seen as inevitable over the coming months.
Andrew Parker, head of the City of London office agency at Cushman & Wakefield said: “Many occupiers will be forced to compromise or take a pre-let. This imbalance is anticipated to result in a sharp rise in rental values during the next 12 months.”
Cushman & Wakefield also reports strong growth in demand for serviced offices, with leasing volumes hitting 1.2 million sq ft in 2014 – representing a year on year increase of 78 per cent.
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