CENTRAL LONDON OFFICE MARKET

According to this report, Central London take-up fell sharply in 2008 to about 12 million sq. ft. and plunged to its lowest quarterly level on record since 1985, during the first quarter of 2009 . Office space demand declined across most of the key regional centres of the UK, where take-up levels fell between 15-50% from 2007. The Glasgow office market experienced the largest drop as take-up levels declined by 48%. The only exception was Birmingham where take-up increased 59% year-on-year due to strong demand from law firms and banks.

CBRE forecasts that total take up in Central London in 2009 will fall below 6 million sqft, almost 70% down from its 2000 peak of about 19 million sqft. This fall will be primarily driven by the ongoing distress in the banking and finance sectors, which have been a major source of office space demand for Central London.

According to CBRE the prospects of a recovery in the UK office market seem way off. The poor prospects in the short term are reflected in the relatively small amount of space currently under offer in Central London, which points to low office transactional levels over the next six months. Given that Central London take up is highly correlated with UK GDP, CBRE predicts that office space demand in Central London will remain subdued in the next two years, as most economic forecasts point to GDP contraction in 2009 and stagnation in 2010.