City’s empty office space soars by 10%

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Commercial property agency NB Real Estate estimates that 11.9% of offices are lying empty in the Square Mile, compared with 10.7% at Christmas 2008 and 5.2% when the market peaked two years ago.

More than 10 million square feet are now vacant in the City — the worst levels seen since 2004.

Rents have tumbled from an average of £52.50 per square foot in the last quarter of 2008 to £47.50. NB Real Estate said landlords are also having to offer incentives to tenants, such as longer rent-free periods.

Alan Dornford, the company's managing director for markets, warned: "There is 2.6 million square feet of new City office space due to be completed in 2009 and nearly all of that is unlet, which will continue to put rents under pressure.

"However, as we move through into 2010, that development pipeline begins to dry up quite dramatically."