Concern about the global economy is keeping some firms from moving to the City, research from commercial property giant CB Richard Ellis found.
In the three months leading up to the end of June, only 744,000 square feet of office space was leased in the City, according to the report from CBRE. This is a full 25 per cent below the same period in 2010.
“Many firms will be considering whether they need to move given the current economic backdrop,” Alan Carter, a property analyst at Evolution Securities told Reuters.
“You also have investment banks announcing layoffs, which produces a knock-on effect that weakens demand from the rest of the financial services industry.”
In central London and the West End overall the leasing figure dropped a full 19 per cent to 2.2 million square feet.
Kevin McCauley, Head of Central London Research at CBRE said: “We are seeing the London leasing market reconnect with the economic fundamentals after a series of deals last year that were driven by pent-up demand.”
Meanwhile real estate investment trust British Land is reportedly considering a deal to buy a group of properties currently occupied by Virgin Active.
Currently, French bank Societe Generale owns the properties, which they bought off property tycoon Simon Halabi who purchased them in 2006.
British Land owns a large portfolio of office space and retail properties mostly in central London.
According to the Financial Times JP Morgan has stated that the REIT is on an acquisition spree’, saying: “While we haven’t discovered a clear focus in British Land’s purchases yet, we see the acquisitions as opportunistic and value-added so far.”
Editor’s notes: Data for office space lettings activity in Central London in 2022 and 2023 can be found in this article.