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LONDON-The Central London office market is merely returning to reality and not facing a downturn, according to a new market commentary from Jones Lang LaSalle. Occupier demand is still up on last year’s level and City rents are rising even though supply is on the increase.

JLL Director Julian Stocks says: ‘The market in 2001 has so far demonstrated robust qualities even against weak economic indicators, highlighting its underlying strength.’ He points out that the amount of floorspace under offer at the end of the second quarter of 2001 was actually higher than space let during the quarter.

Active requirements were on a par with the mid-2000 level, although a number of major requirements are said by JLL to be under review. And JLL’s figures point to a substantial increase in office availability, with the Central London vacancy rate rising from 2.8% at the beginning of the year to 4.3% at mid-year. Although speculative development activity now stands at its highest level of the current cycle, at 4 million sf it is still historically low.

Investment activity was boosted by the £355 million ($500 million) sale of the Berkleley Square Estate, and JLL estimates that deals worth £4.1 billion ($5.82 billion) were transacted in Central London during the first half of 2001, compared with £7.1 billion ($10 billion) during the whole of 2000.

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