London office vacancy rates lowest in 5 yrs

LONDON (Reuters) - Office vacancy rates in London's West End and City financial district have dropped to their lowest levels for more than five years, a report published by property services firm Cushman & Wakefield showed on Tuesday.

Vacancy rates in the West End have fallen to 4.1 percent, its lowest point since the third quarter of 2001, the report said.

In the capital's City and Docklands financial districts, the amount of vacant office space has plummeted 20 percent since the beginning of 2007 to 6.2 percent, the lowest vacancy rate recorded since the first quarter of 2002, the research showed.

Cushman & Wakefield said that prime rents in the West End had reached 117 pounds per square foot, up from 110 pounds per square foot in the first quarter. In the City financial district, prime rents are at 65 pounds per square foot, up 8 percent since the start of 2007.

Since 2001, London has seen an influx of global businesses keen to establish and expand operations in one of the world's fastest-growing financial markets. This has resulted in increased demand for prime space and has encouraged speculative development.

The West End, City and Docklands areas have demand totalling 13.2 million square feet, the report said.

The city is undergoing one of the most ambitious phases of redevelopment since the end of the Second World War, with a total 8.9 million square feet of office development underway, Cushman & Wakefield said.

A large area to the east of the City has been earmarked for regeneration following London's successful bid to host the 2012 Olympic Games and the government has approved construction of several high-rise office-led developments which will transform the city skyline.