Office space take-up expected to increase in 2012. Ray of light for London office market which has recently seen a decline.
Many companies have adopted a ‘wait and see’ attitude towards office space decisions in 2011 due to the tough economy, but that is set to change in 2012 according to a new study.
Cushman & Wakefield, who led the study, said that while there has been a decline in take up across the London office market in 2011, especially in the first half of the year, it is expected that there will be a demand next year to amend this, providing hope for the London office market and developers.
A full national survey by Lighthouse Global asked 500 companies, 213 of which have their head office based in London, about their strategy for 2012 with 49% labelling it as ‘opportunistic growth‘ while 17% cited that they would be looking for ‘aggressive growth‘.
Whilst people have recently been looking at the cheaper end of the London office market, companies believe that the City is crucial in successful business strategy with 77% of businesses saying that it is important for their head office to be in the City.
Despite the positive outlook, 21% believe that London’s position as a global centre could be threatened. Companies are expected to be more focused on the efficiency and flexibility of their real estate, with the height of activity expected in the second half of 2012 with Clerkenwell and Shoreditch being labelled as key areas as West End businesses relocate.
Head of Cushman & Wakefield’s London Group, James Young said: “2011 has been characterised by generally low levels of take-up across London. Next year, despite the troubling economic conditions, we expect things to pick up for landlords, investors and developers.
“There will be hot spots of office activity, and these will involve traditionally West End businesses moving further afield – expect to see activity in areas such as Clerkenwell, Shoreditch and Southbank as our creative industries seek to find cheaper space in up-and-coming locations. Respondents in our study show a strong commitment to London, but the city cannot afford to rest on its laurels.”
With many companies stating that the length and flexibility of their lease and adaptability in terms of space are crucial in their decision making process, Cushman & Wakefield say that forward planning for leasing must be a stronger focus otherwise businesses will foresee extensive real estate costs.