TENANTS taking advantage of landlords offering cheaper rents have helped to drive up leasing activity in the first quarter of the year by 40 per cent, according to research seen today by City A.M.
Take up of office space in central London reached over 2.1m square feet (sq ft) in the first quarter of 2013, significantly ahead of the same period last year, when 1.5m sq ft was let.
Take up is on par with the five-year quarterly average for the second consecutive quarter, property consultants Cushman & Wakefield said.
Google’s purchase of 800,000 sq ft of space at King’s Cross Central, for its new UK headquarters, accounted for more than a third of space let during the quarter, driving take-up in the West End to nearly 1.3m sq ft.
This was the area’s strongest start to the year since 2000 and more than 75 per cent ahead of activity in the first quarter of last year, despite the West End’s high rents prompting more companies to look further afield.
“Occupiers are increasingly broadening their search criteria in an effort to find perceived good value office accommodation,” Guy Taylor, of the firm’s West End branch, said.
“Larger occupiers, in particular, are more footloose...taking the opportunity to drive a hard bargain and secure maximum value from landlords.”
In the City and Docklands, 815,000 sq ft of space was let in the first quarter, up 13 per cent on last year, buoyed by demand from insurers.
Around 1.6m sq ft of space is under offer in the City compared to the West End’s 345,000 sq ft.
Andrew Parker, head of City agency said occupiers striking deals with landlords of City buildings such as Cannon Place and Heron Tower, which have been on the market for some time, has helped boost activity.
“The significant amount of space under offer in the City market is partly driven by landlords of buildings who have incurred substantial letting voids, being prepared to offer very attractive financial terms to secure prospective occupiers,” he said.