Despite recent statistics that suggested demand for commercial office space in London is at a 25 year low, new research claims that take-up of London office space rose by 10% at the end of 2012.
Statistics collected by BNP Paribas show that total take-up of commercial office space in London increased by 10% in Q4 2012 when compared to Q3 2012 figures. The research also found interesting results in the type of businesses utilising Central London office space. The investment banking sector is on the rise, now occupying 26% of the market compared to 23% in 2011, and the insurance industry has also gained ground, rising from 8% in 2011 to 10% in 2012.
However, that apparently positive outlook dims slightly when analysing the results more closely.
Across Central London, the City – the capital’s financial heart – was the only region to increase take-up in commercial office space in London during Q4 2012, rising by 45% in the last quarter of 2012 compared to the same period in 2011. All other regions within the capital recorded a reduction. According to the statistics, the number of businesses moving into commercial office space in London’s West End dropped by 2%, Midtown fell by 35%, and the Docklands dropped by a massive 52%.
Furthermore when considering 2012 as a whole compared to 2011, take-up of commercial office space in London fell by 11%.
Commenting on the findings, Dan Bayley, MD of Central London at BNP Paribas Real Estate, said:
“Although there were some major deals in the last quarter across Central London, the City witnessed the most significant activity, with a number of large lettings to the insurance sector.” Looking ahead, Bayley said that they are expecting another “challenging year” for the commercial property market in 2013, but believes that there will be a resurgence in various business sectors requiring commercial office space in London – among them the insurance and legal industries – as well as technology and media.
He also commented on a possible growth in take-up for “emerging locations” such as Clerkenwell, Shoreditch and the Southbank.
Despite the drop in Central London take-up, recent reports show that England’s capital continues to draw a high level of interest from influential business sectors and corporations. As we reported recently, investors from Singapore, China and South Korea last year poured billions of pounds into property development across the city. This resulted in London becoming the city with the highest level of investment in 2012 and gaining the title of the world’s “top” office space market.
So it’s unlikely to take long before take-up figures for commercial office space in London start to move back up towards pre-recession levels.