With commercial property in the City of London performing at its worst for some 20 years Landlords are dropping prices and becoming more flexible to encourage City take up.
Recent reports by some of the leading commercial agents in the City have revealed that take up for the 1st quarter of 2009 is the worst that the market has seen since the last recession in the early 1990s. Atisreal, Jones Lang Lasalle and CB Richard Ellis have all reported a significant decline in lettings since January with figures showing up to a 75% drop in take up compared to the 1st quarter of 2008.
In response, Landlords have been dropping prices with an increasing number of incentives leading to up to 25% discount rates at prime locations across the City. Consequently occupiers are facing one of the most flexible letting markets in years. Value for money and lease flexibility are at a high and reports in this week’s commercial and retail magazine Property Week suggest that lettings could see a big increase towards the end of the year as occupiers gain confidence in the market. Khalid Affara, managing director of Arab Investments, told the magazine that viewing numbers remain healthy despite the bad take up figures, he commented; “There is a lot of pent up demand but people are afraid to jump too early.”
Meanwhile Serviced Offices remain a very practical alternative to conventional leasing for companies looking for the most flexible lease terms available. The UK’s largest serviced office operator Regus Plc is retaining strong financials despite the recession, having recently reported a 25% profit increase before tax for 2008.
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