There is no hiding the fact that in a year when the world’s gaze has been on London, the office market within it has struggled. As I write this, there are contrasting messages for London’s office market.
UBS has announced 10,000 job cuts as it looks to remove exposure to the higher risk investment side of its business – the Swiss banking giant’s new 700,000 sq ft headquarters at 5 Broadgate is due for completion towards the end of 2014, but questions will be raised over whether this vast amount of space will now be required; Warner Brothers has announced that it has cancelled its 160,000 sq ft requirement and Icap is now rumoured to be staying at Broadgate.
More positively, the TMT sector has once again come to the rescue with the news that Amazon is the mystery company behind a requirement of up to 700,000 sq ft. The significance of the TMT sector has been analysed to death this year, but the increasing prominence of the sector cannot be ignored, particularly in the face of more archetypal London occupiers faltering.
The other knight in shining armour in 2012 has been the insurance industry, which has accounted for significant preletting in 20 Fenchurch Street, and now – through Miller Insurance Services – half of the space in Stanhope’s 70 Mark Lane scheme.
A respectable Q4 may be on the cards if some of the sizable chunks of under offer space complete before the end of the year, nevertheless 2012 will go down as one of the weakest years seen for some time.
While there is no shortage of space in the City and South Bank, the availability rate is sub-5% in the West End and around 6.5% in Midtown and City Fringe, which, coupled with high costs of moving, points towards 2013 being another year of lease renewals and re-gears in these in-demand areas.
