VACANCY rates across the south east office market are at their lowest since 2001, driving rental growth to record highs in towns across the region, Knight Frank reported yesterday.
The property advisory firm’s annual M25 office market report revealed that availability fell by 13 per cent across all types of office space in the first quarter of 2015 compared with a year ago.
The vacancy rate stood at 5.9 per cent in the quarter, falling to 4.2 per cent when including only new and Grade A space, which Knight Frank said was low by London, UK and global standards.
“[The year] has started positively supporting our view that take up in the M25 will be almost 30 per cent ahead of 2014, and above the ten year average,” Knight Frank’s head of national offices leasing team, Emma Goodford, said.
She added that the election has removed uncertainty and would help provide a further boost to demand in the M25 area.
Prime yields now stand at five per cent with the combination of a lack of stock and significant levels of investor money chasing assets expected to drive yields down further this year.