EG London Last Word: Getting from OK to doing very nicely

The halfway point in the year is a good time to make an assessment of how the market is performing. My thoughts? It is doing OK – not brilliantly, and not badly. Confidence is increasing as the economic recovery gathers strength, but it isn’t translating into the levels of letting that might be expected. The amount of space let in the first two quarters across our six core markets is 6.1m sq ft, which is an improvement on the three previous years, but some way off the heights of the 6.6m sq ft that was let in the first half of 2010 or the 7.1m sq ft let in the equivalent period in 2007. Importantly, what we are seeing is consistency. With the exception of Docklands, which is prone to strong peaks and troughs, and the West End, which recorded a very strong Q2 after ?an average Q1, all of the markets have seen take-up stay constant across the two quarters. It is worth noting just how strong the West End was in Q2 this year – the market enjoyed its highest level of take-up since Q2 2010, having been buoyed by a 140,000 sq ft prelet by the Estée Lauder Group of companies at Fitzroy Place. It is also possible to see that the level of activity across the six markets has increased year-on-year for the past three years. Furthermore, we can be optimistic that the second half of the year will remain consistent with – or will even outperform –?the first half of the year. For the seventh successive quarter, more space has been placed under offer than in the previous quarter. In Q2, 2.6m sq ft was put under offer, which is the highest level since Q2 2007 when 2.7m sq ft went under offer. In 2007, Q3 saw lettings of 3.8m sq ft. It is that kind of level of letting that would allow us to upgrade our assessment of the year – from doing OK to doing very nicely indeed.