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The number of buildings under construction rose to a new 15-year high in the three months to the end of September, new research from Jones Lang LaSalle reveals.
The spate of new building work took place during the third quarter, as vacancy rates for London office space and commercial lettings fell to their lowest level since 2000. As a result, new developments are springing up all over the country.
A rise in supply should mean that rents fall, according to Neil Prime, Jones Lang LaSalle’s head of office agency in London.
"Developers have started building speculatively earlier in the occupational cycle than before, and next year will be a peak in terms of speculative supply coming on to the market," he commented.
"The demand curve will be behind supply, and going into 2009 we may see rents dropping by five per cent. If demand isn’t back with us by the end of next year, there will be a lot of office space to fill."