Lack of Supply to Drive London Commercial Market

Growing demand for office space combined with a lack of supply is likely to drive rental growth in London's West End market. That is the finding of the December 2010 West End Offices Update report from leading real estate consultants Cluttons....

Growing demand for office space combined with a lack of supply is likely to drive rental growth in London's West End market. That is the finding of the December 2010 West End Offices Update report from leading real estate consultants Cluttons.

The organisation added that investors were displaying more confidence in the market as well as focusing on assets with development potential.

"Whilst occupier demand continues to improve in the West End, incentives are falling, with rents moving up across most areas as reduced availability becomes increasingly evident," said John Wood, head of Cluttons commercial division.

A lack of availability of Grade A space will continue to be the market trend and a decline in new supply forecast over the medium term will hamper availability further. Indeed, with many lease expiries due over the next two years and the fall in supply over the same period, the market is likely to favour landlords.

The consultant noted that investment activity has increased to its highest level since 2007. Cluttons said that this trend may be a reaction to the lack of new space that is expected to be available in the short term, with few projects being readied for development.

- Thursday 06 January 2011

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