A fantastic new supplement on the analysis of the London office market has been launched in the Estates Gazette magazine. One of the better supplements I have seen - contains some excellent details on the key stats for quarter 1. DTZ is heading up the agent share on deals with an impressive 44 deals in Q1 2008.

Here is an excerpt from the full report which is attached at the bottom:

Outlook for 2008

The effects of the credit crisis are being uncovered and they appear to be rather deep rooted. The economic downturn at the end of 2007has continued into 2008. Occupier demand is tenuous, developers are unsure of the future, and the pricing of assets is subject to review. With current volumes of activity both for take up and investment sales being low, coupled with a growing speculative development pipeline, the outlook for the remainder of 2008 is concerning. Activity for the forthcoming quarters is expected to be even slower, and is likely to be dependant on two things: when the debt market begins to improve, and how much impact there will be on the occupier market.

The West End is expected to see increased asking rents as more new stock completes and occupier demand remains high. In contrast, if levels of activity do not increase it is likely that City rents could stall or possibly fall as the large supply of new space completes, exceeding the current demand.

The employment market is showing signs of suffering, with the financial services industry being hit the hardest. Cut backs of between 10,000 and 20,000 employees are expected as many investment banks release poor results. It has been reported that the continuing credit crunch has led to the financial services sector reducing its spending on land and buildings to the lowest level since June 1992.The outlook for 2008 appears fairly gloomy, for the City especially.

Despite this, it is important to remember that the property market is cyclical. Re-pricing of assets began to show signs of slowing in February and although capital values have fallen, rents as a whole have remained stable. The London office market is also a consistent performer and during the current economic downturn has once again outperformed returns seen in other markets.

EGi London Office Market Analysis PDF