Office Shortage Forces Businesses to Fringe Locations

LONDON-London’s traditional core office areas are now unable to accommodate demand, according to new research from King Sturge. New areas such as Paddington Basin, More London and Canary Wharf have pushed back the traditional boundaries for offices in London.

Recent deals have seen companies like Orange and Marks & Spencer sign pre-lettings at Paddington as well as Lehman Bros and Clifford Change moving to Canary Wharf. The lure of high-specification space and larger floor plates at cheaper rents has resulted in occupier migration to these new areas.

Peter Richards, National Head of Offices at King Sturge says: ‘This is obviously good news for London, which historically has been held in a straight-jacket in terms of office space available. What we will witness in the future, is a redefinition of the London boundaries and the merging of the West End and City areas with occupiers being less territorial while trying to keep control on property costs.’

At the same time the King Sturge research detected the first signs of a slowdown in the central London office market. In the West End, availability has increased by 21% this quarter, attributed mainly to the slowdown in the US economy and the calming of the technology, media and telecoms sector, which has been disposing of surplus space. But in the City market vacancy rates remain at unprecedented low levels, despite slower letting activity. Rents are still rising due to the continued shortage of class A and new stock.