London commercial properties face uncertain growth during 2012.
A leading commercial property consultant has warned that London faces slow growth during 2012 with office space markets not expected to pick up until next year.
London’s commercial office market should brace itself for slow growth during 2012 and may not see a large increase in growth until 2013 as firms look to spend money on their existing offices.
A report by Jones Lang LaSalle states that rather than businesses moving into new commercial properties around the capital, they will instead reinvest money into upgrading their present offices.
The reasons are because of the lack of faith in a troubled economy and the potential concern of the Euro crisis causing a domino effect across the City, West End and other areas of London.
Lower than average yields are expected during the current year, despite lease renewals up for negotiation across the city which could bring in 6.2 million square feet of office space in London.
The City of London which saw its office rental growth market stagnate in 2011, should see the office sector market grow by 4.5% during the next 12 months. This however would bring in 3.7 million square feet of office space, less than the average of 5.1 million square feet of office space which would be expected under normal conditions.
The West End is forecast to bring in 2.8 million square feet of office space lease renewals in 2012 compared to the previous ten year average of 3.1 million square feet of office space.
Jones Lang LaSalle predict that double digital growth in the London commercial property market will not return until 2013 at the earliest.