LONDON-The third quarter of 2002 was another bleak one for the central London office market, with office take-up falling by 15% to 2.25 million sf. So far just year just 6.9 million sf has been absorbed, according to Insignia Richard Ellis. And availability in central London has increased to 19 million sf, over 70% of which is secondhand space.

In the City market, availability has reached its highest level since 1993, resulting in a 5% decline in prime rents and IRE says there is a strong likelihood of further falls before the end of the year. And performance was no better in the West End, where take-up fell from 1.1 million sf to 490,000 sf. The largest deal of the quarter saw 32,000 sf let to Elexon at British Land’s 350 Regents Place.

But IRE says some major deals have been struck in the West End since the end of the quarter, giving rise to hopes of an upturn in the market. Marks & Spencer has leased 70,000 sf at Paddington and Viviendi took 42,000 sf at Prospect House.

Insignia Richard Ellis Research Director Peter Damesick said: “Figures for the third quarter are very much as expected but there is a definite contrast between the performance and indicators for the West End and City office markets. There are signs that the West End market will recover first and the low levels of future supply, combined with a diverse tenant base less reliant on global financial markets, support this view. If the international geopolitical situation is resolved, we are optimistic that availability in the West End will peak in the course of 2003 and rents could see some recovery soon after.

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