Surplus of offices despite new lets

THE number of empty offices in the City of London went up in the first three months of the year as occupiers continued to try to rent out their surplus space. Vacancy rates increased from 7.4% to 8.8% despite more than 600,000 square feet of new lettings.

But some property consultants in the City see encouraging signs in the market, with a number of significant deals in the pipeline.

According to ATIS Weatherall the exact take-up of 686,600 square feet is a considerable improvement on the previous quarter's 420,400. It also believes that leases with a combined floor space of a million square feet are close to completion.

Weatherall's Roy Hargreaves said: 'There is a lot of activity which points towards an improvement at the end of the year.'

So far this year, there have been three lettings for more than 100,000 sq ft, including Allen & Overy at Spitalfields, while there were none in the final three months of 2001.

Meanwhile, solicitor Ashurst Morris Crisp is believed to be interested in British Land's development at 201 Bishopsgate, while Belgian bank KBC is close to signing a lease for 111 Old Broad Street.

The City is waiting to see if Marks & Spencer can achieve the £62.50 per sq ft it wants for its 120,000 sq ft at 70 Gracechurch Street.