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Slow-down in business property demand "a pause for breath"
Demand for commercial property in central London may have dropped, but this does not necessarily spell bad news for the sector.
In fact, the situation represents "a pause for breath" that was needed after above-average levels during previous months.
This is according to James Roberts, head of central London research at Knight Frank, who referred to the latest report from the Royal Institution of Chartered Surveyors (Rics).
He explained research done by Knight Frank concerning business property demand correlated with the findings from Rics, with a particularly large fall in take-up in the capital.
But this was "quite anticipated" because many large deals occurred in the final quarter of last year, which made levels difficult to maintain.
Mr Roberts added: "Usually with commercial property there is about a six month time lag between something happening in the economy and it filtering through to the office market."
This explains why it is difficult to say whether the global financial markets have had a direct effect on the commercial property sector, he stated.
The recent statistics from Rics suggested 7% more chartered surveyors noted a fall rather than a rise in tenant demand in the second quarter of 2010.
It is the first time a negative reading has occurred since the first three months of 2009, with London seeing 38% more chartered surveyors noting a fall than a rise in office demand.
In order for confidence to return, Mr Roberts suggested "good news always helps [and] some big deals always help as well".
Last year, for example, saw the large Watermark Place deal, with half a million sq ft of business property space let to Japanese bank Nomura.
If 2010 sees similarly large deals - such as the potential 700,000 sq ft deal between UBS and the Broadgate Centre - confidence could well return, Mr Roberts added.
However, if the current crisis with the euro continues to go on for the foreseeable future, there could eventually be an impact on commercial property, he warned.
Posted by Sarah Smith
In fact, the situation represents "a pause for breath" that was needed after above-average levels during previous months.
This is according to James Roberts, head of central London research at Knight Frank, who referred to the latest report from the Royal Institution of Chartered Surveyors (Rics).
He explained research done by Knight Frank concerning business property demand correlated with the findings from Rics, with a particularly large fall in take-up in the capital.
But this was "quite anticipated" because many large deals occurred in the final quarter of last year, which made levels difficult to maintain.
Mr Roberts added: "Usually with commercial property there is about a six month time lag between something happening in the economy and it filtering through to the office market."
This explains why it is difficult to say whether the global financial markets have had a direct effect on the commercial property sector, he stated.
The recent statistics from Rics suggested 7% more chartered surveyors noted a fall rather than a rise in tenant demand in the second quarter of 2010.
It is the first time a negative reading has occurred since the first three months of 2009, with London seeing 38% more chartered surveyors noting a fall than a rise in office demand.
In order for confidence to return, Mr Roberts suggested "good news always helps [and] some big deals always help as well".
Last year, for example, saw the large Watermark Place deal, with half a million sq ft of business property space let to Japanese bank Nomura.
If 2010 sees similarly large deals - such as the potential 700,000 sq ft deal between UBS and the Broadgate Centre - confidence could well return, Mr Roberts added.
However, if the current crisis with the euro continues to go on for the foreseeable future, there could eventually be an impact on commercial property, he warned.
Posted by Sarah Smith
Fri, 23rd Jul 2010