The last two quarters of 2009 saw levels of rental activity in the financial services sector unprecedented since the top of the last economic cycle. Banks and other financial companies took up 1.43 million square feet of office space in London’s Square Mile.
By Q2 of 2009, more than 8.5 million square feet of this core London office space stood empty. But a surge in interest in Q3 saw more than 800,000 square feet leased, with a further 630,000 in Q4. A significant proportion of this was down to Japanese Bank Nomura’s massive half-million square foot lease at Watermark Place – a deal more than twice as large as the next biggest contract.
Vacancy rates are now falling and rents are beginning to rise again, thanks to the decrease in available space. Landlords, recently offering attractive deals such as rent-free periods to entice new tenants, are scaling back their incentives.