King Sturge: City shows signs of life in Q2

03/09/2009 13:11

Overall outlook in the Square Mile is stabilising despite 2009 being one of the bleakest on record, according to King Sturge’s Q2 City office market research. 

The data found that occupiers who have for the last 12 months been paralysed and unable to make any financial commitments were now thinking about reactivating their requirements.

With prime rents now -32% (net rents -50%) lower than the pre-credit crunch peak (mid 2007), tenants have an opportunity to restack, consolidate and upgrade, on terms not available for the last 15 years.

Consequently, take-up has more than doubled (670,900 sq ft) in the last three months as shrewd tenants make their move, including a number of the City’s ‘lifeblood’ financial and insurance tenants. 

Accordingly, take-up looks set to break the 2.5m sq ft mark during 2009.

Supply increased by 12.6% during Q2, but space coming to the market is slowing as the City approaches the peak in development deliveries by mid-2010. 

City vacancy rates increased to 13.3% in Q2 - the highest level of supply since 2004, while prime City rents fell to £44 per sq ft.

Trading volumes have increased in the investment market, with transactions standing at £743.6m for the quarter.