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City office market
Office take-up in the City of London over the first half of 1999 fell sharply compared to the same period last year according to the latest research by Richard Ellis St. Quintin, part of Insignia Financial Group. This belies market sentiment that dipped to a low at the end of last year before improving this quarter. Deals on average were smaller in the first six months of 1999 than last year, with over 50 per cent of take-up in units below 15,000 sq. ft compared to 30 per cent in 1998. Competitive bidding to secure space is not commonplace, therefore top rents have remained at £50.00 per sq.ft since mid-1998.
Lack of large pre-letting activity has resulted in lower levels of take-up compared to the heightened levels recorded last year, but demand for second-hand space remains strong, exceeding the amount taken in the equivalent period last year (Table V).
Table V. City of London take-up
Commenting, Roger Lister of Richard Ellis St. Quintin's City agency said:
In comparison to last year take-up levels are down, but we feel confidence has retumed to the market, reflected in the continued level of instructions. We haven't seen the large pre-lets this year, but there is strong demand for high quality buildings.
Availability of accommodation increased to 4.7m sq.ft at the end of June compared to 3.2m sq.ft on the market a year earlier. Although supply has been creeping up over the last year the situation is likely to remain constrained in the medium term with a restricted development pipeline. Few speculative starts are planned in the short term as many developers continue to seek pre-lets before starting construction.