M25 office take-up reaches 743,157 sq ft

By Joanna Bourke | Office | 23-01-2012

M25 office take-up reached 743,157 sq ft in Q4, helping total take-up for 2011 to remain broadly in line with the previous year.

Take-up in the final quarter of 2011 was the second-highest quarterly figure since the onset of the downturn in 2008. Total take-up for 2011 reached 2.15m sq ft, almost exactly in line with the 2010 total, but 19% below the 10-year annual average.

Knight Frank also calculated that at the end of Q4, demand stood at 6.15m sq ft. This is expected to increase in 2013-14, as lease event-driven relocation opportunities increase.

M25 vacancy rates fell from 8.7% in Q3 to 8.3% in Q4, owing to a combination of steady take-up and an absence of new completions.

In addition, M4 vacancy dropped from 11.1% to 10.7% in Q4 2011; its lowest level since Q1 2009.

Emma Goodford, head of South East offices at Knight Frank, said: "In terms of transactional activity, 2011 finished closely in line with our initial forecasts undertaken 12 months ago. With the economic outlook remaining uncertain, 2012 activity will be driven largely by lease events rather than business growth."

The agent has forecast that headline rents will remain stable, but with a further polarisation in rental performance between stronger and weaker locations.

IT, financial and manufacturing businesses are singled out as the sectors most likely to be active in the M25 this year.

Goodford added: "Our forecast for 2012 is that the M25 and M4 corridor will see take-up broadly consistent with the 2011 levels, at 2.1m sq ft and 1.5m sq ft respectively."