INDUSTRY NEWS

London office market ‘remains robust’

The London office market remains robust despite a wider downturn in the property market and concerns over demands in the sector more generally.

That is the message from real estate investment trust, Derwent London, one of the largest portfolio operators in the capital, with a cumulative investment of £2.7 billion, based on year-end values at the end of March – or 5.6 million sq ft.

Indeed, announcing its latest update, the company said the latter part of the first quarter had seen an increase in occupier demand for accommodation, something chief executive John Burns said offered reassurance in difficult economic conditions.

"With a slowdown in economic growth expected this year, demand for central London office space is likely to weaken over the short term," he acknowledged.

"Although we do not expect the West End to be immune from the current market turbulence, we do believe that it will prove to be more robust.

"This is due to its low vacancy rate, demand from a diverse range of tenants and a limited construction pipeline as a result of the restrictive West End planning regulations.

"Outside the City core," he added, "the surrounding villages, such as Shoreditch, Clerkenwell and Holborn, are likely to be more resilient than the City itself as a result of their wide tenant base, modest vacancy rates and less speculative construction."

Mr Burns said the "new and vibrant areas" had become popular places in which to live and work.
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