Google leads search for a West End office

DEVELOPERS are braced for a widespread revival of the West End office lettings market as big banks and corporates, including internet search giant Google, queue up for space.

Last year, only the top end of the market around Mayfair and Knightsbridge saw marked growth as wealthy niche hedge funds and private-equity firms jostled for limited space in London's most prestigious addresses.

But research out today from agents Knight Frank shows a 23% increase in central London office space take-up, to 2.6m square foot for the second quarter of this year over the previous three months, driven by big corporates signing up for larger blocks from Victoria to north of Oxford Street.

Empty office space fell 1.2m sq ft to 25m sq ft. A year ago, some 28m sq ft of London offices was empty. Banking behemoth UBS has just signed up for three floors of a building covering 55,000 sq ft at the corner of Welbeck Street and Wigmore Street.

More take-up is expected over the coming six months which in earlier than widespread rent rises in the City, Knight Frank predicts.

Google, the search engine floated for $23.1bn (£12bn) last year by founders Sergey Brin and Larry Page, is understood to be in final-stage negotiations for up to 53,000 sq ft at Belgrave House, Victoria from landlords Grosvenor Estates and private property firm JER.

Icelandic bank Kaupthing, which has just bought mini City investment bank Singer & Friedlander, is close to signing for a massive 90,000 sq ft of space at Hanover Square, a Mayfair scheme owned by Crown Estates and developer Stanhope.

Meanwhile, Land Securities has benefited from a series of deals at its Cardinal Place scheme in Victoria, lessening fears that the Government-led exodus of civil servants from the area would damage the local rental market.

Listed private-equity firm 3i has taken 65,000 sq ft there while P&O is expected to snap up half of that in the same building at 16 Palace Street.