Knight Frank announces that take-up in the South East office market breaks 1 million sq ft barrier

Take-up in the M25 South East office market exceeded the 1 million sq ft barrier in Q2 06, a 20% increase from the Q1 06 level and the highest for 5 years, giving the strongest indication that the South East office market continues to recover, according to figures released today by Knight Frank (http://www.knightfrank.co.uk ).

M25 Q2 06 take-up totalled 1,052,300 sq ft and letting activity was strong in each of the M25 quadrants. The South West witnessed the most activity within the M25, accounting for 32% of all Q2 take-up. Take-up in the M4 totalled 296,534 sq ft; and in the M3, take-up totalled 369,594 sq ft, a 25% increase on the previous quarter.

This level of take-up continues the decline in the vacancy rate from 8.4% in Q1 to 8.2% in Q2 06, its lowest level since Q1 05. The M4 vacancy rate fell from 10.2% to 9.8% in Q2 with availability totalling 6.2 million sq ft. The M3 vacancy rate rose from 9.5% to 10.3% during Q2 06.

Catherine Penman, head of research, Knight Frank said: “The increase in letting activity provides a positive indication that the market is recovering. This is in line with our forecasts which predicts the M25 vacancy rate to fall to 7.5% by March 07.”

Emma Goodford, head of national offices, Knight Frank said: “Strong take-up in Q2 is supported by a total of 920,000 sq ft that is currently under offer within the M25 office market, demonstrating the continued recovery and growing occupier confidence. Despite weight of money into the investment market, there is limited speculative funding activity which we expect will re-emerge in Q3 and Q4 in prime centres where Grade A stock is now scarce.”

The Knight Frank M25 Office Index, which monitors the progress and the status of the M25 office market by enabling the market trend to be interpreted through the movement of this one index, rose from 130 to 139. The substantial increase was largely due to the significant upturn in take-up.

For further information, please contact:
Emma Goodford, head of national offices, Knight Frank, +44 (0)20 7861 1144
Catherine Penman, head of research, Knight Frank, +44 (0)20 7861 1236
Olivia Gallimore, commercial pr manager, Knight Frank, +44 (0)20 7861 1035

For a copy of the report, please email Stephanie.flooks@knightfrank.com

About Knight Frank

Knight Frank is a leading independent global property consultancy (http://www.knightfrank.co.uk ). Headquartered in London, Knight Frank and its New York-based partner Newmark Knight Frank operate from over 140 offices in established and emerging property markets on five continents. Last year, the companies handled transactions valued at over $41 billion with annual revenues of over $545 million. With a combined staff of 4,500, this major force in real estate is meeting the local and global needs of owners, tenants, investors and developers worldwide.

Visit the website for further information about Knight Frank property services (http://www.knightfrank.co.uk ), or for more information on office property in the UK (http://www.knightfrank.co.uk/commercial/Offices/default.aspx ):
or contact
Olivia Gallimore
Associate, Commercial PR Manager,
+44 (0)20 7861 1035
Olivia.Gallimore@knightfrank.com
Knight Frank LLP,
20 Hanover Square,
London,
W1S 1HZ