Wary companies shy away from new office agreements

Marion Dakers
LARGE companies stayed put rather than risk signing up for new office space in the last quarter, research seen by City A.M. suggests.

Office take-up in central London tumbled by almost half to 2.336m square feet in the first three months of 2011, after a strong end to 2010, according to real estate adviser Equipe.

Agreements for space in the City fell to the lowest level in two years thanks to a dearth of deals for more than 50,000 square feet.

However, deals for smaller offices slightly improved on levels seen at the end of 2010, Equipe said, and the overall number of deals rose by 10 per cent.

Friends Provident, who took 48,000 square feet at One New Change, signed the largest City tenancy agreement during the period.

The Docklands suffered its worst quarter for new office deals in the past ten years, with just four deals for a total of just over 18,000 square feet.

The West End fared better, with take-up rising 13 per cent during the quarter to 1.108m square feet.

“Activity [away from large-scale deals] is symptomatic of firms adapting to a sluggish economy and tailoring their activities accordingly,” the researchers said in a note to clients. “We therefore believe that it will take time, but the market will recover,” the researchers concluded.