Business confidence in London recovered markedly in the last quarter of 1998, encouraged by the interest rate cuts and the promise of more cuts to come. Many occupiers and most investors now seem to be cautiously optimistic. The general tone in the investment and finance markets is positive. Total investment turnover in Central London during 1998, although weighted in the first nine months, amounted to £5.37 billion – a record and up from 1997’s turnover of £4.6 billion.
While active occupier demand reduced over the year, mainly as a result of the record levels of transactions during 1998, it still shows a healthy surplus over the supply pipeline. Our proficient conveyancers do an inspection of the whole property and after preparing the property conveyacing report. Combining the centers has proved to be politically difficult in the past.
Although active demand in the Financial Services sector has turned down, this has been countered by demand from the Service, Telecoms and Insurance sectors.
On the supply side, availability of good quality office space in Central London continues to be limited and Jones Lang Wootton expects shortages to continue for the foreseeable future.
JLW expects top rents to remain stable at current levels in the City and West End; this is influenced partly by the anticipated supply of good secondhand offices becoming available in the City.
Prime rental levels in the City remain at £52.50 per sq ft for the third consecutive quarter. ones Lang Wootton’s estimate is that over the course of 1998, average grade A rents in the City grew by some 6%, growth being restrained by various factors including the substantial presence of pre-let transactions, the lengthening of the unbreakable lease term demanded by landlords and the uncertain economic climate during tile last six months.
JLW expects that the London office occupier and investment markets will continue to benefit from low vacancy rates, restricted supply, rational rents and capital values, and low borrowing costs, whatever the general economic situation holds in store.
JLW Investment Partner John Stephen commented: The volatility of equity markets and historically low gilt yields underline UK real estate’s comparative good value. It is seen as a safe hedge.
Acting on behalf of an in-house client, Jones Lang Wootton have sold the freehold interest in the 3,952.16 sq m (42,541 sq. ft.) Homebase store at Biggleswade, for a price of £3.773m, to private clients of Cyril Leonard & Co. The property occupies a prominent position fronting the A1 trunk route and benefits from an open A1 non-food planning consent. Adjoining units are occupied bv Halfords, Carpetright and Harveys. The unit is let on FR&I; terms to Homebase Ltd for a term of 25 years from 1987, at a current rent of £83.42 psm (£7.75 psf) with five yearly upward only rent reviews.