Demand for offices rising in London: Bishopsgate bombing helps to produce a 30% increase over the past year

FURTHER evidence that the property market is on the mend was provided yesterday by Savills, the chartered surveyor, which said that demand for London offices rose by 30 per cent in 1993.

Figures from the firm's research department showed that 8 million sq ft of offices were taken up in central London compared with 6 million in 1992.

Increased lettings meant that supply of office space at the year-end was lower than 12 months previously for the first time since the mid-1980s. Available space stood at 31.6 million sq ft compared with 36.6 million at the end of 1992.

However, Stephen Newbold, Savills' market analyst, warned that 1993 take-up had been boosted by the Bishopsgate bombing in April, when more than 1 million sq ft of offices were damaged.

Another note of caution was struck by the absence of large financial and professional firms from the year's biggest lettings. Of the seven lettings over 100,000 sq ft during the year, three were by government departments, while the list was headed by London Regional Transport's move to 275,000 sq ft of Canary Wharf.

Other big deals included the relocation of the Department of the Environment in the West End and the move from Holborn Circus to Canary Wharf of Mirror Group Newspapers. QVC, the American home shopping business, took 90,000 sq ft at the Observer's former home in Battersea.

The letting of the remaining 50 per cent of Canary Wharf was given a boost earlier this week by the appointment of Jones Lang Wootton and Richard Ellis as joint agents to act for the consortium of 11 banks that now owns the development.

According to the Savills report, shortages of top-quality new space started to appear in the City and West End last year, but it is estimated that 15 per cent of the capital's offices remain available. The oversupply is expected to depress rental values for another two or three years.

Despite the abundance of space, Savills estimated that by the end of 1995 grade A offices would represent only 1 per cent of the available stock in the West End and 3 per cent in the City. That had already led to the first tentative stirrings of the development cycle.