Supply in central London has fallen for the seventh quarter
London-focused office developer, Derwent, has said that space in the capital is being squeezed by low supply, higher rents, and strong demand.
In an interim management statement released on Monday, it said that supply in central London fell for the seventh quarter in a row, and that there was “continued rental growth”.
This was particularly pronounced in the West End, it said, adding that this had helped push up capital values.
“Despite strong investor demand, transaction volumes fell due to a lack of supply,” it said.
Derwent’s share price fell 7p to about 1728p at the close of trading on the day of the announcement.
It also announced the sale of five properties in Covent Garden for £68m to Capital & County Properties and issued £175m worth of bonds to fund its development pipeline.
In a separate first quarter market report on the office market in the Thames Valley, surveyor King Sturge also reported rising rents in west London and inside the M25.
“Locations such as Hammersmith, Staines and Uxbridge are likely to see an increase in headline prime office rents over the medium term for well-located town centre stock,” it said.
“We expect developer confidence to continue to strengthen in the core west London and inner M25 locations, but competition will be strong.”