Development works will begin before the end of this year on Golden Square, W1, to provide 42,000 sf of new offices, 17,000 sf of commercial space and four apartments, which will be available in Autumn 2004. Benchmark Chief Executive Nigel Kempner said that, on completion, this will be the only new unit of 60,000 sf available on a London square.

And early next year work should begin, subject to freeholder consent, on a new office development to provide 33,500 sf at Melrose House, Savile Row, W1. The scheme will complete early in 2005.

Kempner said that his confidence in the West End was shared by other investors, reflected in the strong investment market over the past six months. "A lot of people see the West End as an opportunity," he said. "There is room for rents to grow again as business confidence improves worldwide." Benchmark's analysis is that West End vacancies are now around 10% and although rents are falling more slowly landlords are having to grant incentives to achieve lettings.

But Kempner said he was less sanguine about the City, which is far more dependent on the financial services sector for its tenant base than the more broadly-based West End market. Benchmark has reduced its City exposure to about 10% of its portfolio and is looking to reduce this further.

The news came as Benchmark announced its preliminary results for the year to 30 June 2002. Despite falling rents, a hardening of yields meant that its portfolio valuation remained virtually static, with Net Asset Value up 3.4% on the year to 382.4p per share.