Despite a dive in occupancy of central London office space - an indication of the severity of the financial crisis - some of the City's banks, such as JPMorgan, Bank of Tokyo and Nomura, are due to occupy new premises driven by expansion plans, while another large property deal is expected to happen by the end of the year, according to research by property consultancy Knight Frank.
Active central London property requirements from financial sector occupiers totalled 3 million square feet in June 2007, more than 80% of which was driven by expansion. By June 2009, this figure had fallen to 2.2 million square feet.
For the majority of banks, office space leases are forecast to be driven by lease events, obsolescence or consolidation, and to be in excess of 2.5 million square feet by the end of 2009.
"Current office market conditions mean that tenants are in very strong position to negotiate attractive deals," said Bradley Baker, head of Knight Frank's central London tenant representation.
Occupiers signing leases now can expect to secure far better terms than those signing leases at the peak of the market in 2007. Prime headline rents have fallen by more than 30% in the City to £44 ($72) per square foot compared to £63.5 per square foot in the second half of 2007. In Canary Wharf, London's other financial district, prime headline rents have fallen by 27% and are now £35 per square foot.
