Central London’s property occupation market defied the gloom in the first quarter of 2008 by equaling the 2.9m sq ft take-up of the same period last year, CB Richard Ellis said today.

The City of London led the charge, according to CBRE’s research, with a total 1.4m sq ft transacted – up from 1m sq ft in Q1 2007.

Kevin McCauley, head of central London research at CBRE, said the outlook for the market also looked good.

‘Whilst financial sector activity was reduced to 23% of total take-up in the City in the first quarter compared with 42% in the first quarter of 2007, encouragingly, the first quarter saw the financial sector activate a number of new searches, including a 200,000 sq ft requirement from ING,’ he said. ‘However, the impact of Bear Stearns collapse in mid-March on market sentiment remains to be seen.'

But the research also said the credit crunch has impacted on rents with prime rents down from £65/sq ft in the City to £60/sq ft and remaining static at £120/sq ft in the West End.

The research also showed the impact of the debt-expensive market on Central London with £2.5bn spent in the first quarter of the year compared to £3.9bn in Q1 2007 and £6bn in Q2 2008.

McCauley, added: ‘At the moment there is 13.3m sq ft of space under construction across Central London; of this amount, 4.9m sq ft is pre-let. The majority of speculative space under construction is in the City, totalling 6.5m sq ft, which is the highest level on record. We anticipate that 2008 will see the highest completion totals before new construction declines in successive years. For the period 2009 to 2012 a further 6.2m sq ft is planned for construction but developers have not yet broken ground.’