Office space in the capital may soon be at a premium, according to new research. Image courtesy of: sxc.hu
A new report into the availability of serviced office space in London suggests many SMEs looking to move into new business centres in 2012 will be frustrated at a short supply of commercial property within the capital.
The study, undertaken by commercial property consultants, Jones Lang LaSalle
(JLL) illustrates there is a greater demand of service office space in London than there is supply.
Despite JLL predicting that rental prices for serviced office space in London will be below average, many areas of the city are likely to run out of available space by the end of the year or sooner.
In the West End in particular, JLL forecasts that there could be a shortfall of serviced office space to rent in just eight months. This has been blamed on a combination of unexpected demand and a lack of commercial property development due to the uncertainty of the national economy.
JLL expects commercial property rents to increase by 1.7 percent nationwide in 2012, but that areas with office space shortages such as the City of London and the West End will see increases of 3 and 3.5 percent respectively.
Additional research this month from DTZ has found that poor, grade C-rated office space exceeds the amount of grade A and B-rated space across the UK. An estimated 70 percent of the total office stock is thought to be grade C, in comparison to grade A and B stock which makes up 9 percent and 22 percent of the national stock respectively.
Martin Davis, head of UK research at DTZ
, said: “Contrary to our expectations grade C has a lower availability rate than grade A and B stock.
“Nevertheless, we expect this position to deteriorate in the face of continued low economic growth and competition for occupiers from better quality space.”