The amount of vacant office space in central London has increased by 36.5% in the last 12 months according to Cushman & Wakefield.
In its Central London Business Briefing published today Cushman said just over 14m sq ft or 5.72% of office space is vacant across London’s West End, City and Docklands markets.
Vacancy levels in the City of London and Docklands is around 9.2m sq ft, an increase of 25% in 12 months with rents in the City dropping by 20% to £52.50/sq ft. It said City rents are expected to fall a further 14% by the end of the year to £45/sq ft – a level not seen since 2003.
In the West End there has been a 70% increase in supply with 5m sq ft of vacant office space. It said rents in the West End have fallen around 23% during the last 12 months although there remains a relatively limited supply of space at the top end of the market.
Cushman said the increase was caused by companies affected by the economic downturn shedding staff, consolidating property holdings or relocating to alternative locations. However, it said the figures were not as depressed as during the recession in 1992 when the vacancy rate in Central London was 16.2%.
James Young, head of Central London offices at Cushman, said: ‘2008 has not been a great year for London’s commercial property market to say the least. The financial downturn has been felt across all of the city’s office markets but we won’t see a return to the massive vacancy rates of the early 1990s. Although there is new development coming through over the next two years, this is not on the same scale as the last recession.’
Central London investment totals have also been affected with total investment in London last year reached £6.8bn – a fall of 65% from the £19.7bn total in 2007.
Around £3.4bn was invested in each of the West End and City & Docklands markets. In the West End this was a 41% fall on 2007’s total of £5.8bn and in the City & Docklands it was a fall of 75% from 2007’s £13.6bn total.