Total occupier demand for London office space increased by 6% in the first quarter of the year, reversing the trend in 2010, accordingly to preliminary figures issued by real estate advisory firm Jones Lang LaSalle.

Compared to the last quarter of 2010, the City market saw a 12% increase to 7.8 million sq ft (725,000 m2) while in the West End, total occupier demand rose by 11% to 4.3 million sq ft.

'While the increased demand for London office space further demonstrates how strongly the market has recovered since the financial crisis, there is a growing imbalance between quality supply and increasing demand for Grade A space across London,' said Jonathan Evans, head of the West End Agency at JLL. 'As the development pipeline continues to deplete, upward pressure on rents will only get stronger during the rest of the year. During the next six months the West End market will definitely see prime rents in the core consistently surpassing the £100 per sq ft mark.'

While prime rents remain stable in the City at £55 per sq ft, there was a 4.5% increase to £92.50 per sq ft in the West end, where the service sector dominated take-up, accounting for 58% of the 540,000 sq ft let. In the City 630,000 sq ft was let, while the Banking and Finance sector was responsible for 33% of total volumes.

Dan Burn, head of the City Agency of JLL, added: 'Going forward the Banking and Finance sector will continue to dominate the City market as they look to expand staff numbers, and we expect to see landlords reducing lease incentives during the next few months and pushing hard on rents as supply falls and demand continues to increase.'

£2.1 bn (EUR 2.4 bn) worth of assets haves been transacted in London's office investment market since the start of the year, a 28% increase on Q1 2010. The West End market accounted for £992 mln, while the City reached £1.1 bn, an 83% increase on Q1 2010.