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LONDON-The latest research by agent GVA Grimley shows the continuing strength of the central London office market. It is likely that the full impact of 11 September and its aftermath will not be apparent until the fourth quarter figures are analysed.

Take-up of central London offices increased by nearly a third in the latest quarter, from around 2.5 million sf to around 3.25 million sf. Over the first three quarters of 2001, take-up is now only 11% lower than over the first three quarters of 2000, which was itself a record high year. However availability has risen to 6.1% from 4.1 % in Summer 2000. But GVA Grimley points out that this is still low by historic standards: in the early 1990s availability reached 20%.

‘While this scarcity of supply has undoubtedly been an important factor in keeping availability low and holding up rental values, take-up rates also indicate that demand has remained strong,’ said Nick McCalmont-Woods, office agency partner at GVA Grimley.

Prime rents are now static in all three main sub-markets at sub areas, at £79 ($116) per sf in the West End; £65 ($95) in the City and £45 ($66) per sf in Docklands. The rate of rental growth has slowed every quarter since peaking in late 2000.

Stuart Morley, head of research at GVA Grimley, forecast: ‘While we expect the London office market to experience more difficult times over the coming months, the third quarter figures show us that the market is fundamentally stable. While take-up will weaken, the continuing lack of supply of large Grade A office space should keep the market relatively healthy and prevent any significant adjustment in rental values.’

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