Offices to the east of the M25 are still securing only 15% of annual demand compared with their counterparts in the west, despite the significant benefits offered by eastern locations, according to Knight Frank’s quarterly report.
Steve Mallen, head of research, said: “There are multiple benefits associated with an east of London location which centre on lower labour costs, less congestion, cheaper services and ample investment opportunities. However, developers and investors are once again directing almost exclusive attention to the west in the pursuance of occupiers who, despite increasing sophistication, seem willing to put rational economics to one side and adhere to locational perceptions of the past.”
Of the 43 prelets recorded in the past 24 months, only two have been to the east of London. Of the total up-and-ready take-up of 298,325 sq m (3,211,248 sq ft) over the past year, 84% has been located in the western markets.
The report shows that the supply of offices in outer London has bottomed-out, with vacancy rates varying between 3.5% and 3.9% over the past 18 months. Alastair Elliot, head of business space, commented: “The strength and depth of demand means that all new development is being rapidly absorbed and the market is still under supplied.”
EGi News 21/08/00
