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Thursday, January 22, 2009

UK Office Market: Rising Vacancies, Falling Rents

by Calculated Risk on 1/22/2009 10:44:00 PM

From the Financial Times: Great Portland says demand for offices falls

Great Portland Estates, the London office developer, has reported a rise in vacancies and fall in rents as demand dries up for office space in its core West End property portfolio.
The company reported a clear deterioration in its occupier market. Rental value declined by 9.4 per cent overall, with a fall of 13.8 per cent in West End offices and 2.1 per cent in West End retail.
The void rate across its portfolio more than doubled to 7.5 per cent, from 3.2 in September, although the increase mainly reflects forward development planning rather than tenant failures.
As the economy weakens (the British economy will probably be officially in recession tomorrow), the vacancy rate will probably also be impacted by tenant failures (negative absorption).