Capita Symonds’ report shows buoyant office market in the capital

Rental values climbed 14% across London last year as the restricted supply of office space continued to drive up rates.

A report by Capita Symonds found rent rose particularly sharply in the City and Docklands areas, up 25% and 33% respectively.

Rates in these locations returned to December 2008 levels, Capita Symonds said.

Take-up including lettings, sales to owner occupiers and pre-lets also rose strongly, up 37% from 2009. But take-up in the fourth quarter fell by 41%, reflecting the lack of new offices.

Alan Dornford, director in Capita Symonds’ real estate division, said: “The last quarter of 2010 ended with a sharp fall in take-up of offices across central London markets. But the low-key end to the year disguised the fact that 2010 overall has been a year in which central London markets have recovered strongly.

“At the root of this performance is the dwindling stock of grade A space and a development pipeline which is at an historically low level. In the city, for example, just 1.3m sq ft is scheduled for completion in 2011, with nothing beyond that.”

Last year the number of unoccupied commercial spaces fell to 8%, from 9.1% in 2009.