Office Property Market Commentary Q2 2004 – Reality catching up with sentiment

Last quarter, sentiment was ahead of reality. Deals were being talked about but not actually happening. The RICS confidence survey stated that enquiry levels in the first quarter of 2004 had “risen at their fastest pace since the stock market high of 2000” – but few had translated into take-up. Asking prices were rising for new stock in some areas but declining in others, availability was fluctuating and vacancy rates continued their upward march. This quarter, however, reality appears to be catching up with sentiment. Vacancy rates are stabilising, availability has fallen again, take-up has risen and average prices for new stock are up over central London – and for the fourth quarter running in the West End. There is still a long way to go, and there are many liabilities in the market, but Q2 2004 was a good quarter for London. This progress can be expected to continue.