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LONDON-A surge in leasing activity in London’s West End during June 2002 boosted take-up figures for the first half of the year to 1.7 million sf, almost exactly in line with the six-monthly average for the years 1992 – 2001.

In June alone over 700,000 sf of office space was let with four deals on units over 70,000 sf including lettings to Lazards at Mayfair Place, and Capital International at Enron’s former headquarters at 40 Grosvenor Place.

But FPDSavills warns that demand remains subdued against a backdrop of falling equity markets and continuing negative news from the corporate and financial sectors. And despite the late surge in leasing, availability in the West End has continued rising and reached 6.89 million sf at the end of June. This represents a vacancy rate of 5.7%, compared with the low point of 1.8% reached at the end of 2000.

Adam Hetherington, FPDSavills’ Head of West End Office Leasing and Development, said: “While the strong leasing activity in June is good news, it is still too early to herald a recovery in business confidence, particularly in the light of the recent turbulence in the equity markets. If business confidence does start to improve over the remainder of the year, as some surveys are suggesting, we would expect to see some of the tenant-controlled space being re-absorbed. This, combined with improving demand, could lead to a turning point in market sentiment towards the end of this year/early next with the first signs of falling vacancy rates and a return to modest rental growth.”

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