Firms head back to the City of London

Occupancy rates in the Square Mile are rebounding as firms look back to London as a finance hub.

London’s position as a finance hub has never really been in doubt. But in the midst of the financial crisis, a number of companies began to look elsewhere in favour of more affordable, and perhaps more competitive, locations.

It seems the capital is recovering from the effects of that shift, with a new report showing that companies are moving back to the City.

Data from The City UK shows that take-up of office space and occupancy rates within the Square Mile were up in the second quarter from the previous three months.

In fact, office occupancy is now at its highest level since the beginning of the UK’s economic downturn, indicating that companies are not being put off prime locations as they once were.

Across the City and Docklands, just 6.1 per cent of office space was vacant over Q2 – the lowest level since the beginning of the downturn, while an extra 203,000 square metres of space was rented out. The figures suggest that firms are flocking to London once again, and the capital is consolidating its status as a leading financial and business centre.

The UK Competitiveness Tracker edged upwards again in Q2, although the pace of improvement is slowing down slightly.

But with seven consecutive quarters of growth in a row, that may mean the UK has done much of its catching up. In the 12 months to June, 13 indicators posted improvement while just three fell.

Business volumes are still firmly rising, with confidence also strong across every subsector. Although lenders said that small and medium-sized firms is little changed, it improved slightly for large corporates, which is likely to translate itself into further growth. That might explain why even though employment indicators were decidedly mixed in Q2, The City UK is anticipating that employment will continue to improve.

Confidence remains strong across the finance industry according to The City UK, and it seems that respondents were looking positively on the prospects for the UK as a whole. As a result, the organisation says, it’s likely there are more encouraging figures to come.