Take-up in London’s office sector increased by 10% during Q4-2012, according to the latest figures released by BNP Paribas, the UK based property firm.
In all of London’s office submarkets, growth in take-up was especially prominent within the City, which rose by 45% during Q4 2012, up to 1.4m sq ft.
The technology, media and telecommunications sector (TMT) continued to expand on its growth from the preceding quarters; its occupancy rate now represents 26% of the market, compared to the 23% of 2011.
The TMT growth reflected the trend in EU office markets where its companies have leased more office space than banking and financial firms for the first time, as reported by SOS in November 2012.
According to the report, the banking and financial sector now accounts for only 12% of London’s office space occupancy; a 6% drop from that of its 2011 level.
There was a slight increase in occupancy by insurance industries, accounting for 10% of the market in 2012, compared to the 8% of 2011.
Commenting on the analysis, managing director of BNP Paribas Central London said: “Although there were some major deals in the last quarter across Central London, the City witnessed the most significant activity, with a number of large lettings to the insurance sector. Looking ahead, we expect 2013 to be another challenging year, with transactions led mainly by lease events such as regears.
“There is unlikely to be as much activity this year from the insurance sector, but expect legal sector demand to recover. In addition, continued growth in the tech and media sectors will drive rents and take up in emerging locations such as Clerkenwell, Shoreditch and the Southbank.”
According to the report, take-up in London’s other submarkets did not perform so well though, most notably the Docklands where take-up dropped by a sizeable 52%, bringing it down to 0.09sq ft.
Another area affected by negative growth was Midtown, where take-up in the district fell by 35% throughout Q4, 2012.
In the West End, take-up was largely “flat”, dipping by 2% to 0.069m sq ft.
BNP Paribas did note however that, compared to 2011, Central London office overall investment rose by 33% to £12.53bn.
Paul Henwood of BNP Paribas Real Estate said: “As expected, last year was challenging with investors remaining cautious. However, London continued to be perceived as a safe location and overseas investors remained active, especially within the West End and the City.”