Cluttons - General - Cluttons Calls The Top Of The Market For The South Bank

Date: 08 Jun 2001

Top South Bank rental values have now reached £484 per sq m (£45 per sq ft), a level which Cluttons believes will be the peak in this rental cycle. The firm's latest South Bank research report highlights weakening demand, increasing supply and a more cautious approach by occupiers - a combination which will lead to top rental values falling slightly over the next 12 months.

Total available office space increased over the last 4 months and now stands at 27,047 sq m (291,026 sq ft), of which 27% is grade A stock. Construction activity remains high, with projects totalling more than 50,000 sq m (538,000 sq ft) currently underway. In addition, 265,000 sq m (2.85 million sq ft) of office space has planning consent and over 80,000 sq m (860,800 sq ft) is at the planning application stage.

Commenting on the findings, research analyst Melanie Bayliff of Cluttons' Central London Business Team said:

"The large amount of development activity and large floorplates available at reasonable rents will ensure that the South Bank is chosen over many other central London locations. Our view is that take-up will continue to grow. Although, it is unlikely that there will be any inrease in top rental values in the near future due to the market becoming overheated and ongoing US concerns. We expect rental values in the £25-30 sq ft market to remain fairly stable."

Clerical Medical and Delancey are expected to conclude the purchase of the highly sought after adjoining buildings Becket House on Lambeth Palace Road and York House on Westminster Bridge Road, SE1. This could lead to a substantial office development of circa 70,000 sq m (753,200 sq ft).

In addition, Sainsbury's has unveiled plans for the redevelopment of its Stamford Street headquarters, after signing for Lord Hamlyn's 33 Holborn Place in November. The project, due to be completed by 2004, will create approximately 35,000 sq m (376,600 sq ft) of office space over 19 floors, with a Sainsbury's store planned for the ground floor.

Two significant pre-lets were highlighted in the research, Ernst & Young have taken 35,687 sq m (383,992 sq ft) at CIT's newly renamed London Bridge development, More London and The Financial Times signed up for 15,121 sq m (162,702 sq ft) at Riverside House in Southwark.

Mike Daggett head of investment within Cluttons' Central London Business Team commented:

"The South Bank is at last fulfilling its potential, especially along the corridor adjacent to the Thames between Vauxhall and Bermondsey. Attractive schemes at competitive rents are providing real alternatives to other Central London markets."

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