Plans to turn the South Bank into an established central London office location have been seriously dented by the slowdown of the London market.
Research published this week by Cluttons claims: “The South Bank needed another year or so of economic prosperity for it to be a sufficiently developed and established office environment. Unfortunately this was not achieved.”
Rental values on the South Bank fell by over 25% during the last nine months of 2001, from a peak of £45 per sq ft (£484 per sq m) in March 2001 to £33 per sq ft (3355 per sq m). Cluttons believes that a further fall of 15% is possible in 2002.
The group said that rents may not pick up until 2004 – “long after prime central London rents have started to recover”.
Cluttons added that, although there is over 5m sq ft (464,500 sq m) of offices in the development pipeline, new development had not achieved critical mass when the market lost momentum and consequently the area is still regarded as “fringe”.
The research also showed a marked weakening of demand and increasing levels of supply. Since July 2001 total available space to let has increased by 40% to 540,202 sq ft (50,185 sq m) while take-up was just 60,709 sq ft (5,637 sq m).
Investment sentiment towards the South Bank has also waned over recent months and as a result yields have typically weakened by 0.5%.
EGi News 22/01/02
