Available space up for first time in two years
THE amount of available office space in 'Midtown' London has increased for the first time since 1992.
There is about 2.2 million square feet available now, 400,000 sq ft more than in the first quarter this year, Knight Frank and Rutley says in its latest Central London quarterly report.
The rise in supply resulted from a drop in take-up levels and the addition to the market of a substantial volume of space, it says.
Consequently, the area's vacancy rate has risen from 6.2 per cent to 7.7 per cent.
Midtown encompasses Holburn, St Pancras, Bloomsbury and Covent Garden.
The report says the area is boarded by the Embankment, Farringdon Road, Euston Road, Tottenham Court Road and Charing Cross Road, adjacent to the City, and is made up of WC2, WC1, and parts of EC1 and EC4.
In the second quarter, only 206,000 sq ft in Midtown London was taken up, the lowest since the third quarter of 1992. It followed an uncharacteristically high take up in the previous quarter of 529,000 sq ft.
Also, more than 40 properties came on to the market in the three months to July.
Most significant of these were: Albion House in New Oxford Street, 39,600 sq ft; Africa House in Kingsway, 54,200 sq ft; and 11 Strand, 41,500 sq ft.
Other smaller properties, mostly in the EC post code areas, were also released.
At the same time, there was a change in character of available space. The report says 70 per cent was in units of less than 30,000 sq ft, compared with 80 per cent in the first quarter.
Only three properties of more than 60,000 sq ft remain, all within WC2. The largest is the Adelphi in John Adam Street.
The report speculates that the limited supply of larger properties opens the way for the development market to re-emerge.
'While supply increased during the second quarter, availability in Midtown remains heavily biased towards smaller accommodations,' the report says.
'As a result, this increase in supply is unlikely to hinder growth in the development sector for larger projects.' There were two developments completed in the second quarter: Seven Savoy Court, WC2, is 52,000 sq ft.
Stonecutter Square in Farringdon Street is 150,260 sq ft. It was pre-let to Touche Ross and is being outfitted.
No projects have started since, but developers have begun pre-letting campaigns to gauge interest in redeveloping large, older buildings in the district.
The success of these campaigns will determine the future development trends for the Midtown, the report says.
The main campaigns are for: the Mirror Building; the Express Building; Chancery Court; State House; and New South Wales House. No prospective tenants have been secured.
The report says developers appear unwilling to consider speculative development in Midtown.
However, they may be encouraged to consider them by the falling supply of larger properties and the consistent take up.
Projects begun in the next few months should reach the market when supply shortages have become particularly acute, the report says.