According to new research office space in the capital may soon be at a premium. A study, undertaken by commercial property consultants, Jones Lang LaSalle highlights the demand of service office space in London is outstripping its supply. A new report into the availability of serviced office space in London suggests that several SMEs looking to move offices into new business centres in 2012 will be frustrated at a short supply of commercial property within the capital.
Despite predicting that rental prices for serviced office space in London will be below average, many areas of the city are likely to run out of available space by the end of the year or sooner. In the West End in particular, forecasts show that there could be a shortfall of serviced office space to rent in just eight months. This has been blamed on a combination of unexpected demand and a lack of commercial property development due to the uncertainty of the national economy.
Back in 2011 global property consultant Cushman and Wakefield believed that there would be a critical shortage of high-quality office space available for rent in the West End of London between 2011-2013. The total supply of office space in the West End fell by 10 percent in the first quarter of 2011, according to figures released by Cushman and Wakefield with the likes of Soho and Covent Garden being the most popular areas and found rents of up to £100 per square foot very common in Mayfair and St James’.
Jones Lang LaSalle expects commercial property rents to increase by 1.7 percent nationwide in 2012, but that areas with office space shortages such as the City of London and the West End will see increases of 3 and 3.5 percent respectively.
With the continued economic uncertainty office occupiers are seeking the flexibility that serviced office space in London can offer, furthermore the lack of new developments and the additional demand created by the 2012 Olympics has simply increased the competition for the better quality space leading to a shortage in supply.