London commercial property market experiences turnaround

A growing confidence in the central London Office market has caused a significant increase in take-up levels of commercial property according to the latest research by CB Hillier, the international property consultants.

A far cry from the poor results at the end of 1998, the commercial property sector has experienced a 55% in take-up comparable to the third quarter in 1998. It also means that the amount of new space in the City has dropped by over 25%; many companies are finding a severe shortage of new, large good quality buildings.

CB Hillier Parker say that levels of development remain strong at 1,186,200 m2 (12.8 million sq ft) and notes that caution evoked with last year's threats of recession means that institutions are still wary about funding anything but the best schemes.

Catherine Rees, analyst at CB Hillier Parker commented: "As a result of the uncertainty at the end of 1998, the development market has seen a significant change in emphasis."

With the lack of space available in central London, it appears that more companies are looking to the outskirts and area's like the Western Corridor which has shown a large increase in rental value over the past months. Top quality space remains in high demand and is attracting rents of £322.92 per m2 (£30 per sq ft) in several locations, according to CB Hillier Parker.

The rising rents are also blamed on a lack of new supply on the market. Mike Ayton, director of office agency at CB Hillier Parker, comments: "There have been a number of lettings of large, good quality buildings in the Western Corridor that have led to sharp local rent increases which are a result of restricted supply."