Uk Office Demand Slows in Q2, but Underlying Picture Remains Healthy

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The latest UK Occupier trends research from King Sturge shows that office demand slowed in Q2 2010 but the underlying picture remains healthy.

Figures have to be analysed in the context of the UK election and growing concerns about the pace of global recovery

As was widely expected, UK office market take-up slowed in mid-2010 after an exceptionally strong start to the year. In the three months to June, occupiers took just 1.3 million ft2 of office space, less than half as much as in Q1 and the weakest quarterly performance since the market’s lowest point of early 2009.

“It is, however, important to look below the surface,” comments Andrew Burrell, King Sturge’s Head of Office Research. “We were cautious about the Q1 surge and would also argue that the more recent data do not signal the feared double-dip.”

“Figures have to be analysed in the context of the UK election and growing concerns about the pace of global recovery,” he continues. ”Not surprisingly these uncertainties have slowed decision-making. But there is already evidence that this pause will be brief, with under-offer statistics for Central London and the South East firmly pointing to a rebound in Q3.”

The failing momentum in Central London - which had been driving the recovery in office demand over the last 12 months - was the key reason for the slowdown in Q2’s figures. A flood of big deals in the City and West End pushed the previous quarter to an all-time high, but this unusual strength was not sustained.

By contrast, the biggest surprise on the upside in Q2 was in the Thames Valley. This market emerged from a two-year slump with a string of important deals. Activity has continued into Q3 and it is hoped that this sleeping giant will make a full contribution in the period ahead.

By contrast, a cloud hangs over the regional outlook. Even in the best performers – Manchester and Glasgow – take-up was well down on the previous quarter. The concern is that with the role of the public sector more significant and the Coalition threatening to slash spending across the UK, these centres could fall further behind in the upturn.

Notes to Editor:

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King Sturge is one of the largest international property consultancies in Europe. In the UK King Sturge owns 22 offices and in Continental Europe it operates 20 offices in 13 countries. Together they form part a worldwide network of over 215 wholly owned and associate offices in 47 countries. Over 3,800 staff throughout these offices cover all property sectors and specialisms including plant and machinery, and residential.
In Europe, King Sturge operates in the major UK commercial centres and principal mainland European cities. In Asia Pacific, the firm has associations in Australia, Indonesia, Malaysia and New Zealand. In the Americas, King Sturge has business partners in North, Central and South America through King Sturge CORFAC International and ChainLinks Retail Advisors.

Through a joint venture with a wealth manager, King Sturge now has a presence in the Middle East. The office will initially be based in Dubai, concentrating on states in the Gulf Corporation Council: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

For further information please contact:

Régis Jacquemin, Corporate Communications Manager    
+44 (0) 20 7087 5120        
+44 (0) 7791 019 341

Andrew Burrell, Partner, Head of Research
+44 (0) 20 7087 5510            
+44 (0) 7814 184 420

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Regis Jacquemin
King Sturge
+44 (0) 20 7087 5120
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Andrew Burrell
King Sturge
+44 (0) 20 7087 5510
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