City of London’s Office Demand Reaches 14-Year High

Demand for offices in the City of London business district reached the highest level in 14 years as companies outside the financial-services industry competed for space.

Office take-up rose to 3 million square feet (280,000 square meters) in the third quarter from 2.2 million square feet in the prior three months, broker Knight Frank LLP said in a statement today. The level is almost double the long-term average of 1.7 million square feet, it said.

“Finance is now one of several sources of office demand now that the square mile’s economy has drawn in a variety of new industries, as is the case in New York’s key office market,” Dan Gaunt, head of City Agency at Knight Frank, said in the statement.

The City of London, dominated by banking and other financial firms, has seen a surge in leasing deals with companies ranging from Amazon.com Inc. to London Business School. That’s pushing down the vacancy rate as a development slowdown following the financial crisis limits new space coming onto the market.

Vacancies in the City stand at 7.3 percent, the lowest since the third quarter of 2007, Knight Frank said. The broker said it expects the high level of demand to continue into 2015 as companies try to secure space before rents increase.

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