London Office Space Sees Surge in Demand as Big Firms Scout Around

After a long downward spiral lasting the better part of a year, the London real estate market seems to be finally looking at a turnaround. A host of companies including Google and Royal Dutch Shell are reported to be scouting around for space in the City for their offices. This comes as welcome news for the London real estate market reeling under dropping rentals and rising vacancy levels.

According to real estate consultants Cushman & Wakefield, Royal Dutch Shell, the oil company, is looking at around 220,000 sq ft of office space while Google needs around 145,000 sq ft. Apart from these two, other interested buyers are also present in the market, such as insurer Aon Corp and Centaur Media, the publishing house.

According to Guy Taylor, one of C & W’s property agents, there were a number of buyers in the beginning of 2009 who had held off making decisions due to the downward trend in the market. These same buyers now seem to be ready to commit, indicating a turnaround for offices to rent London likely in the coming months. According to industry figures, rental take-up for office space in the City has gone up by nearly 65% in the third quarter of the year, as compared to the previous quarter.

Property rates as well as occupancy levels during the second quarter were at their lowest in over ten years, and real estate management firms in the City like Hammerson, British Land and Land Securities were some of those most affected by the downturn. The new demand is likely to push up office space requirements by over 9 million sq ft, a rise of nearly 20% over the beginning of the year.