The relocation of 8,000 employees from one of the world’s largest financial institutions to office space in Canary Wharf will create Europe’s biggest collection of bankers in the next few months, moving the capital of the UK and Europe’s financial centre away from the City of London.
Costs and lack of demand are just two of the reasons why offices are remaining empty according to new reports.
Many of the office developments in the capital are remaining unoccupied due to a lack of demand and the high expense of office space in the weak financial climate.
The current economic downturn has also seen some companies extend existing leases rather than seeking out new ones upon expiration.
Some of the most well-known skyscraper projects have remained empty following their completion including Minerva’s Walbrook in London’s financial district. The Walbrook is just one of the buildings that remains unoccupied in the area, two years after its completiton. In fact it is estimated that in the vicinity, 66% of the office space completed this year is yet to be leased.
The amount of leases of London office space has more than doubled since this time last year.
In the first quarter of 2010 leasing of Central London office space saw a 100% increase, compared to Q1 of 2009.
Reports suggest that this is the case all across London, with City of London reaching an above average occupancy rate and the West End seeing a significant recovery.
Within Q1 2010 the city actually leased or sold 2.2 million square feet of office space, compared to only 0.7 million sq-ft for the same time last year.
MERJS, a commercial property agency, has leased out the third floor of a Soho office space to Reliance Media Ltd.
The company MERJS is a leading commercial property agency and are very active within the Central London office market.
Now MERJS has secured a lease on the third floor of the office block at 56a Poland Street, in the centre of Soho.
Tower 42, which was the first skyscraper to be built in the City of London, is now being put up for sale by the owners BlackRock and Hermes Real Estate.
After owing the property for 12 years the owners have now announced plans to sell the 600ft building, which was the former Natwest tower.
They also have plans to sell five other office buildings, in the same area, on a 2.2-acre plot.
The eagerly awaited Heron Tower, in London, has been “topped out”, which is a ceremony to celebrate the near completion of the building.
Plans for the tower began in 1999 and now, 11 years later, development company Heron International is ecstatic about the approaching completion date.
“I’m delighted. It’s taken a long time, but we finally got there.” said Gerald Ronson, chief executive of Heron International.
A financial report announced that Central London has seen a significant decrease in investments since the current government announced plans for the general election.
Cushman & Wakefield, a leading commercial property firm, reported that during the first quarter of 2010 investment in commercial property has fell by 50%.
As the announcement of the general election happened within the first quarter, it is thought to have had an impact on the investment within the capital.
British Land has recently announced that they have secured lettings on 465,000 square feet of office space since February.
British Land had previously established a significant London based deal with the Macquarie Group, Gill Jennings & Every LLP and Dickson Minto for 256,000 sq-ft of office space.
Now with similar lease agreements, British Land has reached a staggering 92% occupancy rate.
Due to a lack of availability office prices in London are expected to rise by approximately 43%.
The forecast by Knight Frank estate agents predicts that the average cost of renting an office within London will rise from £44 per sq ft to £52.50 per sq ft by the end of 2010.
Although the average price for offices varies across the city, increases are expected within specific London areas.
In the City of London office rent is expected to rise by 19% this year, whereas in the West End this is only an 11.5% increase. However, this means that the cost will be £72.50 per sq ft rather than the current £65 per sq ft.