The West End was the best performing office market in central London during the first quarter of this year. The recent DTZ Central London Q1 Report revealed take up of commercial space in this district climbed by seven per cent, compared to the final three months of 2011, and increased by 33 per cent year-on-year. By contrast, take up in central London and the City fell by 17 per cent and seven per cent respectively on a quarterly basis. DTZ expects the situation in the City to improve this year, while the prospects for the central district are flat and a decline is anticipated in the West End. The organisation noted the West End market was boosted at the start of the year by activity among retailers and a lack of available prime stock that has resulted in pre-leasing deals in some locations.
Looking at the property investment side of the market, there are reasons to be optimistic. According to DTZ's research, transaction volumes for offices hit GBP 3.3 billion in the first quarter of 2011 - almost 25 per cent higher than the quarterly average and the biggest total since the final three months of 2010. The Docklands area experienced a significant increase in activity, with the amount of money ploughed into its commercial real estate sector jumping from GBP 12 million at the end of last year to GBP 500 million between January and March.
Knight Frank recently asserted the office markets in London and the wider south-eastern region will be boosted over the coming years by companies looking to trade up from Grade B premises to those with a Grade A rating. The firm stated take up of offices in the M25 area has been dominated by demand for Grade A space since the beginning of last year, with Emma Goodford, head of south-east offices at the company, commenting: "Churn by occupiers wanting to upgrade their space will drive the market and we predict this will account for more than 80 per cent [of] take up." Overseas financiers have been the biggest investors in the south-east office sector over the past year, with a market share of around 55 per cent.
- Monday 07 May 2012