London office space has recovered since the recession.
London office space has made a recovery since the recession, but will Government cuts affect this?
The recession devastated pretty much every industry imaginable in the UK and the office leasing sector was no exception.
Vacancy rates hit an all time high and an extremely low demand for new office space ensured that the office leasing industry suffered a huge downturn. These factors also had an effect on any plans to build or develop office space within London and the UK. Its been nearly 10 months since we’ve been officially out of the recession, but how much has changed?
Office rentals are on the increase again with clients such as Aon, Siemens and Rockspring moving into or developing new offices in London. Office redevelopment plans are on the rise again too; the most prominent being the ‘Walkie Talkie’ building that is set to be built at 20 Fenchurch Street. This project was shelved in 2008 during the recession but this year the plans have been picked up by property company Songbird and Land Securities Group and is due to be completed by 2014.
Despite the optimism, there are fears that recent government cuts will affect office space occupation and demand all over the UK.
“While London will be fairly insulated from the effects thanks to strong demand for office space, regional locations such as Newcastle and Wales will fare worse as it will be harder to find tenants to replace the outgoing public sector,” commented Sarah Whitney, managing director of government and infrastructure at CBRE.
Concerns have been raised over the lowering of office valuations caused by the cuts and government departments leaving their London offices. Many companies remain optimistic though as demand for London office space is still quite strong, Harm Meijer an analyst at JP Morgan claims that the government leaving their current leases “would actually offer opportunities to refurbish buildings or turn them into residential property.”