Most of the demand has been from private investors backed with bank loans, and from pension funds prepared to pay higher prices. But some industry insiders are increasingly concerned at the rampant demand for commercial property, which has seen some buildings in the capital sell for yields of below 5%. At the same time rents are relatively low and there is a sizeable stock of empty offices.
Other reports published today show modest take-up figures relative to the investor demand. A survey by CB Richard Ellis predicts Central London take-up for the year will be 12 million sf, no better than the market average for the past decade. Third-quarter take-up in the West End slipped slightly from 1.2 million sf to 950,000 sf, according to CBRE, while for the City the figure was 1.1 million sf, a slight increase. The report says that occupancy figures for Central London were "below healthy market levels."
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