New ‘star’ areas drive activity in London’s West End

Sue Foxley, head of research, said: "The current uncertainty in the economic stability of the euro zone undoubtedly is maintaining business caution. West End lettings activity in 2012 has been positive but lease events rather than new requirements continue to dominate demand."

Cluttons said it had noted that the new space requirements which were in the market were driven predominately by the TMT sector, with many businesses proving mavericks in their location choices. It is expected that those West End submarkets offering the combination of value and vitality will remain the focus of occupier attention.

Cluttons has named "cool crescent" areas such as Noho, Marylebone, Soho and Covent Garden as rising star submarkets. These areas have seen rents rise by an average of 6% (in the six months to the end of Q1 alone) with a variety of occupiers opting for value coupled with a vibrant environment.

Cluttons’ latest research reports that the capital’s reputation as a "safe haven" against a backdrop of global financial and political events remains intact.

Foxley said: "It is too early to assess the impact of the ongoing euro zone crisis on investor capital flows, but the West End office market has experienced an upturn in net investment in 2012 with activity dominated by overseas investors.

"Despite an opposing pressure in the wider investment market, vibrant lettings activity in those edge-of-core-submarkets is boosting investor interest, driving the potential for a slight inward yield movement this year. With yields stable in the Mayfair and St James’s market, the differential between the prime West End core and the ‘cool’ periphery will narrow."

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