One swallow doesn't make a summer. But how about four?Today Savills announced it thinks London office rents will rise to as much as £56 per sq ft in the City this year and up to £98 per sq ft in the West End next year.
That's a lofty 18% rise in the square mile and 11% in the West End.
That follows the news yesterday that Land Securities is to dust off plans at three speculative developments in London (the EGi story is here). And earlier this week, both Knight Frank and Jones Lang LaSalle issued up-beat statements about how 2009 ended.
Savills reasons were:
A huge swathe of secondary space that makes up the bread and butter of
agent's fees remains. There's only a little said in anyone's report about that. Take up figures need to gnaw away on these before
the market can get to the core of the problem.
And let's not forget the reason availability is so low is because developers have remained unwilling or unable to hit the development button, squeezed by a continually tight lending market. Without this the market can hardly be said to be recovering especially when agents say occupiers are still out looking for a bargain - however unrealistic shrinking availiability might make that.
Swallow picture by g_kovacs from Flickr
But it's worth noting that these figures cover headline rents only. Rents on Grade A buildings that make up just the thinest peel on the apple of the capital's property market and there are many mouths to feed.
- A chronic lack of prime stock which Savills claims will also help support the investment market
- Development will have nosedived in the City from an average annual completion of 3.2m sq ft to 500, 000 sq ft by 2011
- Development will have almost quartered in the West End by 2012
- Vacancy rates in the City stand at a not insubstantial 14.2% but are down over the year from 15.6%.
- In the West End vacany rates are characteristically low at 6.7%
And let's not forget the reason availability is so low is because developers have remained unwilling or unable to hit the development button, squeezed by a continually tight lending market. Without this the market can hardly be said to be recovering especially when agents say occupiers are still out looking for a bargain - however unrealistic shrinking availiability might make that.
Swallow picture by g_kovacs from Flickr
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