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Demand for central London office space on the rise

Published 11/08/2016

A study from property giant CBRE found the amount of office space leased in London jumped 24% month-on-month in July
A study from property giant CBRE found the amount of office space leased in London jumped 24% month-on-month in July

The demand for rented office space in central London has bounced back since the EU referendum in a vote of confidence for the capital's finance sector.

A string of lease agreements has pulled the City of London out of a Brexit-vote lull, with US banking giant Wells Fargo taking 220,700 sq ft of space in King William Street.

This growing appetite has been underscored by a study from property giant CBRE, which found the amount of office space leased in London jumped 24% month-on-month in July to 980,400 sq ft.

It said the banking and finance industry accounted for 31% of take-up last month, followed by 22% from the business services sector and 17% from creative industries.

Emma Crawford, head of London leasing at CBRE, said the market was " buoyant " and had seen three deals for more than 50,000 sq ft of space in July.

"Businesses are still confident about London's significant advantages as a global business centre, even when the UK is outside the EU," she added.

"This continued demand, mostly driven by key lease events, in a market with low supply, is maintaining headline rents at the same rate as in May and June.

"Of course the jump in leasing activity is good news for the market, and whilst this is not universal across all sub-sectors of the London market, even with heightened economic and political uncertainty, longer term prospects remain promising."

However, the study found that July's take-up was below the 10-year average of 1.1 million sq ft per month.

It added that available office space stepped up by more than 2% in July at 1.36 million sq ft, but was 7% below the 10-year average.

It comes as foreign buyers swarm London's commercial property market as they look to capitalise on the collapse in sterling following the EU referendum.

Property giants CBRE and Colliers have both seen a surge of interest from buyers from as far afield as South Korea and Taiwan as the value of the pound continues to dive, with London still seen as a ''safe bet'' despite Britain's vote to leave the EU.

Office blocks in central London are the biggest lure to potential investors, and the Asian enquiries come as property experts believe the currency fall will spark fresh investment in the capital from more established players, including those in North American and the Middle East.

Prices in the capital have become markedly cheaper for overseas buyers since the referendum result, which caused the pound to slump to 31-year lows against the dollar with no sign of a recovery to pre-Brexit levels.

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