LONDON-A new survey from CB Richard Ellis has identified tentative signs of a recovery in the South-East office market. Office take-up during the first half of 2003 was 40% lower than the long-term average at 2.4 million sf. But there are positive signs from the Thames Valley market.

Take-up in the Thames Valley increased for the first time since the second half of 2000, with total lettings of 1.33 million sf during the first half of 2003, up 9% on the same period last year. Demand is primarily from occupiers taking advantage of depressed rents and attractive incentive packages–including rent free periods of up to 21 months on a 10 year lease–to upgrade their existing accommodation.

But the Thames Valley vacancy rate remains relatively high at 14%. Total availability increased by just 11% during the six months, compared with increases of over 30% in both halves of 2001. This reflects a virtual halt in development activity with developers unwilling to start schemes in the absence of pre-lets.

CBRE calculates that average rental values fell by 6.8% over the last year across the region as a whole, with the Thames Valley experiencing the sharpest decline at 9.2%. Senior Director James Brounger said: “We expect tenant demand and take-up to increase during the early part of 2004 in the wake of a US-led acceleration in global economic activity and a bounce-back in business confidence.”

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