Office space market defies George’s doom and gloom cuts

Posted Saturday 20th November 2010

The imminent announcement by George Osborne outlining the biggest programme of public sector cuts seen in the UK for a generation will certainly send most business owners and commercial property experts into a very depressed and forlorn state come 3pm today.

Thankfully though, there is a bit of good news from two leading real estate organisations to take their mind off whether their rubbish is going to be collected fortnightly as opposed to weekly due to council budget restraints…

The latest Global Office Real Estate Review from Colliers has shown that an increase in office space leasing activity amongst most of the world’s major markets may be tentative signs that the worst of the economic slump is finally over. Canada, the Asian Pacific and Latin America all posted healthy growth rates and show signs of possible future expansion.

At a local level, Madrid, Dublin, Moscow and Tel Aviv also saw vacancy levels drop which is encouraging news for the European market. According to Colliers, the London office rental market in particular benefited more than most in the past 6 months – a view echoed by CB Richard Ellis.

Whilst office space in the West End of London still tops the charts as the most expensive place in the world to rent an office, this hasn’t deterred many businesses with CBRE reporting that over 3.5 million sqft of Central London office space was let in Q3 2010 – a 27% rise on Q2. Overall supply is down to 15.4 million sqft, 6 million sqft lower than Q2 2009, and increasing demand is expected to push up rents even further.

Mr Osborne’s speech later on this afternoon will certainly make all the headlines tomorrow morning, and rightly so of course, but perhaps it isn’t all ‘doom and gloom’ across the spectrum for the economy in Britain as some observers make out.

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