Short supply to drive central London’s office market this year
The office market in central London is likely to be driven by a shortage of supply this year, according to a recent report by commercial property agency GVA. The firm’s Central London Analysis report predicts that the volume of commercial property investment deals will be subdued in 2015, following strong activity in the last two years.
“Looking to 2015, we believe the central London market will be driven by a lack of supply rather than greatly increased demand, with take-up unlikely to reach the great heights of the last two years,” Property Week quoted Patrick O’Keeffe, head of London markets at GVA, as saying.
According to GVA’s report, the central London market in 2014 was more active than the peak years of 2006 and 2007, with the activity 44 percent higher than in 2013. In total, 23 million square feet of office space were transacted in the last two years, GVA says. In the fourth quarter alone, Central London take-up totalled 2.9 million square feet.
According to GVA, it’s unlikely that the momentum would be maintained in the first three months of this year. The firm expects a quiet first quarter in terms of investment activity, as little of last year’s stock remained and few new opportunities have been brought to the market. Nevertheless, demand from the Middle East, the Far East and the US will persist, prompting strong competition for good-quality assets, according to GVA senior director Justin James. This would drive prices and yields to record levels in 2015, James said.