Commercial Property News and Comment

Mixed Signals...

Last month, we featured the RICS research for the 3rd quarter of 2000, headed "Take Up Slows Down". Knight Frank have now issued their own summary for the same period claiming no signs of waning demand, continuing shortage of quality offices, and further rental growth across all sub markets.

The Central London Office Market has continued its progressive performance over the quarter. Take up levels, in just nine months, have exceeded the historic annual high and demand shows no sign of waning. The key restriction on future demand and take up levels remains the continuing shortage of quality product on the market, with a vacancy rate now down to 3.5% and developments increasing precommitted before practical completion.

Rental growth has continued across the sub markets, further deepening the chasm between the City and West End, where a quarterly uplift of 15% has been seen. Total returns in Central London, according to the IPD marketly index of 19.4%, based upon rental growth of 15.3% and capital growth of 11.7%, are clearly attractive to the broad spectrum of investors.

Source: Knight Frank Research Q3 2000.