City office market to see return of major tenant deals in 2013

 
Kasmira Jefford
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THE CITY office market is set to see a revival in major letting deals this year as tenants take advantage of landlords offering incentives such as rent-free periods and cheaper rents, research today shows.

Just three deals over 100,000 square feet (sq ft) were completed in 2011-2012, in stark contrast to the 11 signed from 2009 to 2010.

But property adviser Colliers International said prospects for 2013 were looking brighter, with two deals over 100,000 sq ft already concluded. Insurers Amlin and Liberty Mutual are taking space in the Cheesegrater and Walkie Talkie towers respectively.

Meanwhile CMS Cameron McKenna and Amazon are both under offer for 150,000 sq ft at Hines’s Cannon Place and 210,000 sq ft at Axa’s Sixty London. Ernst & Young and Munich Re are on the hunt for more than 200,000 sq ft.

Mark McAlister, head of City offices at Colliers, said “concern over shrinking rent free periods and other tenant incentives” was helping to spur activity.

Despite a pick-up in major deals, take-up from the banking sector remains subdued, with occupation down by 18 per cent since 2009.

Colliers said while technology firms have grown their footprint in the City, three quarters of deals are under 5,000 sq ft and doubts remain as to whether the sector can fill the void left by banks.