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The City - EC1 to EC4

2006 was a year of strong performance for the City market. The fourth quarter saw vacancy rates drop to 7.5% - their lowest level for five years and down from 9.5% at the end of 2005. FOCUS recorded over 2.3 million sq. ft. of transactions in the EC postcodes in the fourth quarter, taking the annual figure to over 7 million sq. ft.

Amongst the larger transactions were pre-lets at Scottish Widow's 5 Aldermanbury Square to Dutch bank Fortis (166,000 sq. ft.) and Babcock & Brown (61,000 sq. ft.). UBS Warburg also took 84,000 sq. ft. in two separate transactions in Broadgate.

At Condor House, opposite St Paul's Cathedral, US lawyers Morgan Lewis took 36,000 sq. ft.

Availability in the City continued to fall during the fourth quarter reaching 6.2 million sq. ft. by the end of the year. In this cycle, the market has absorbed 8.5 million sq. ft. since the peak of availability in early 2005 of 14.7 million sq. ft.

The space available includes: 160,000 sq. ft. at London Merchant Securities’ Angel Centre, on the northern fringes of the City through DTZ; 84,000 sq. ft. at Old Billingsgate market; 120,000 sq. ft. on Houndsditch and 90,000 sq. ft. at 85 Queen Victoria Street.

Generally the market is short of existing space in units over 75,000 sq. ft. However, the development pipeline is likely to deliver plenty of space in the medium term. FOCUS identifies some 5.5 million sq. ft. under construction for completion in the next three years.

City rents continued their upwards movement in the fourth quarter. Prime rents stand at around £55 per sq. ft. and incentives are waning fast. Average rents for new or refurbished space stand at £31.50 per sq. ft. while secondhand space comes in at £24.95 per sq. ft.

• West End (W1 & SW1)
• Midtown (WC1 & WC2)