Lean year for office space developments in 2011.
London office space developments are set to decline for the third consecutive year.
2011 looks set to be a lean year for London office space with only 1.3 million square feet of office space expected to be completed throughout the year.
This is a considerable reduction from last year’s 2.5 million square feet. Only five buildings are scheduled to be finished by the end of the year these include the 440,000 square foot Heron Tower, Rothschild’s new headquarters and Hines’ Cannon Place.
Office space in London has been on a steady decline at 3.71 million square feet in 2009 and 3.74 million square feet in 2008. The fall in office developments is also expected to continue into 2012 and 2013.
The largest development slated to be completed in the capital is the Shard which will provide over 250,000 square feet of office space in the Square Mile.
The lack of office space is expected to cause an increase in the price of office rents which will affect the amount of pre-lets that are taken out.
“Pre-letting will be crucial not only because there will be a shortage of grade A space, but also because large units suitable for major occupiers are going to be in especially short supply,” commented Alistair Brown, director in the office agency team at DTZ.
In 2008 the recession had a major effect on the development of office space and the market is still trying to recover. However, some companies such as British Land and Land Secuirites have shown promising signs by restarting major projects including the Walkie Talkie and Cheesegrater buildings.