Total take-up in London's City and Docklands office market for 2010 reached 7.6 million sq ft (706,000 m2), for the first time in five years, according to Cushman & Wakefield. This figure exceeds that of 2008 (6.6 million sq ft) and 2009 (4.6 million sq ft), giving encouragement to developers to push ahead with schemes over the next year.

Underlying active demand is still muted, but as occupiers become more confident about the economic recovery, this is expected to pick up in 2011. The total take-up figure has been skewed by several major transactions in recent months, namely JP Morgan taking 1 million sq ft at 25 Bank Street, UBS signing for 700,000 sq ft at 5 Broadgate and Bloomberg taking 500,000 sq ft at Walbrook Square.

Three major City buildings over 100,000 sq ft are due to be delivered in 2011:the Heron Tower, Cannon Place and 200 Aldersgate Street. Total speculative space under construction in the City at present is around 3.0 m sq ft. This is substantially lower than that of the same point in 2009, where construction was 4.3 m sq ft, representing a drop of around 30%. It was recently announced that development will start at other large projects in the City: Land Securities’ ‘Walkie Talkie’ at 20 Fenchurch Street and British Land’s ‘Cheesegrater’/ The Leadenhall Building. At present, the vacancy rate in the City 'core' market is 10% and 7.5% in the City overall.

Take-up for the City in Q4 2010 was approximately 2.5 million sq ft, up from 1.8 million sq ft in the previous quarter and well below the 10-year average of 1.5 million sq ft (6 million sq ft/per annum 10-year average).

Elaine Rossall, head of Central London Research, Cushman & Wakefield, said: 'After a very challenging year in 2009, last year saw a big increase in take-up and a return of speculative development and pre-lets to the City, as evidenced by the UBS and Bloomberg deals. We expect to see further improvements in prime headline rental growth, which together with the recent increase in M&A activity and further confidence in financial services industry, should feed through to improved tenant demand. However, there is some concern over underlying active demand remaining muted.'