London office lettings rise

LONDON (Reuters) - Central London landlords agreed more than 3 million square feet (278,706 sq m) of office lettings in the third quarter, a rise on the year, despite shocks in global financial markets, data showed on Thursday.

Research from property services firms Jones Lang LaSalle (JLL.N) and Cushman & Wakefield showed demand for office space in central London continued to rise in the three months to September.

Cushman & Wakefield said leasing activities across the capital was up 15 percent on the year, while Jones Lang LaSalle said overall demand in the West End was 12 percent higher than at the end of 2006.

Tight supply across London had increased the number of pre-lets as tenants scrambled to secure the best space, Cushman & Wakefield said.

In the City and Docklands, almost half of third-quarter take-up -- 1.2 million square feet in total -- was in buildings still under construction.

Five deals were recorded over 100,000 square feet, including Royal Bank of Scotland's 359,000 square feet letting at Bankside 2&3 on London's South Bank and Reed Smith Richards Butler's pre-let of 160,000 square feet at Broadgate Tower in the City.

Total take-up in the City and Docklands area for the year to date stands at 5.8 million square feet, up 18 percent on the same time in 2006, the Cushman & Wakefield data showed.

SUPPLY SHORTAGE

Grade A office vacancy rates in the West End fell below 2 percent in the third quarter, said Jones Lang LaSalle, reflecting a shortage of available stock and boosting prime rents by 28 percent over the last 12 months to 115 pounds per square foot.

Around 1 million square feet of space was let in the West End during the third quarter, pushing the year-to-date figure up by 613,000 square feet against the total at the same point in 2006.

Supply in the City and Docklands area also fell from 8.9 million square feet in the second quarter to 8.6 million square feet at the end of the third quarter, according to Cushman & Wakefield. This was down from 11.7 million square feet at the same point in 2006.

Cushman & Wakefield said healthy tenant demand supported increases in rents in 2007, with 28 West End lettings at 80 pounds per square foot compared with just nine for all of 2006. A total of 19 deals have been recorded at 90-plus pounds per square foot, all involving financial occupiers, Cushman & Wakefield said.