London office schemes on site total 1 million sq m

Over 1m sq m of office space was under construction in central London by the end of the third quarter of 2006. The level of activity is the highest for three years and marks a 19% increase on the previous quarter, a new report said.

The West End is continuing to be plagued by a space shortage, with just 24% of London’s construction work taking place there. The bulk of activity is in the City, where 72% of the capital’s construction is underway. Docklands is seeing only 4%, said GVA Grimley’s Central London Office Commentary, Q3 2006.

The report warned that although across central London the demand for office space was strong in the quarter, lack of supply in the West End and Docklands was hampering market activity.

The biggest occupational deal of the third quarter was Transport for London taking 22,320 m² of the Palestra, 197 Blackfriars Road, SE1. TfL was also involved in the second biggest deal, in which it took 18,580 sq m in the London Bridge Tower, GVA found.

It said that at the end of the third quarter the central London vacancy rate was 6.6% of total stock, down from 7.8% three months earlier. This was a big improvement on the previous year’s rate of 9.6% and the rate of two years ago, 12.2%.

Of the 1.2 sq m of vacant central London office space, 58% was in the City, 32% in the West End and 10% in Docklands.

The City’s vacancy rate was the lowest for nearly five years, the report said. At the end of the quarter 722,000 sq m of City office space was under construction. This compares to construction levels of 424,000 sq m one year ago and 231,000 sq m two years ago. In total there are ten City schemes under construction that have a total floor area of over 20,000 sq m and 24 schemes that exceed 10,000 sq m.