West End occupiers affected by the global economic turmoil are bringing more second-hand space to the market, threatening the resilience of the areas high rents.
In that quarter there was 260,641 sq ft of second-hand grade-A vacant space available compared to 656,044 sq ft of new grade A space.
While, by the third quarter of 2008, the amount of new space has grown slightly to 775,577 sq ft, the amount of second space has grown to 653,753 sq ft.
The increase in second hand office space being brought to the market could put a downward pressure on rents which, at present, are still over £100/sq ft.
‘The volume offered by tenants constitutes 68% (443,155 sq ft) of total Grade A second hand availability,’ says the Strutt & Parker report.
‘Needless to say, this undoubtedly reflects the impact of the wider economy on West End tenants and the further implications on vacancy rates.
‘This trend is expected to continue as more tenants bring surplus accommodation to the market.’
Third quarter availability in the West End stands at 4.8m sq ft with 4m sq ft of tenant demand.
The vacancy rate is 6.3% compared with 5.5% last quarter