Commercial property lettings in the City of London have fallen by a third over the last six months.

The City of London’s take-up of new office buildings has fallen by almost a third over the past six months, while the banking recruitment market also looks to be weakening.

The credit crisis looks to be hitting the City of London’s property market – often viewed as the health barometer of the financial sector.

Office take-up in the key City market fell 40% in the six months to March, compared with the six months previously, and 60% in the Docklands area as the effects of the credit crisis hit financial occupiers.

Property consultancy Jones Lang LaSalle reported the fall in lettings in its quarterly update, ‘Western Corridor Industrial/Warehouse Market Report Spring 2008’, forecasting a 2% drop in prime rents in 2008, and a higher drop for larger office lettings. 

At the same time, speculation suggests that thousands of jobs could be lost in the banking sector as investment banks have recently begun to lay off staff.
Employment Group Michael Page International reported today (7 April) a slowdown of its UK expansion and a weakening of the banking recruitment market – including some of its other disciplines that service banking clients.

Steve Ingham, Chief Executive of Michael Page, said: “Whilst we continue to experience strong activity levels and demand for talent, in certain areas there are signs of more cautionary behaviour. Consequently, we are taking a similar approach to adding headcount in those areas most likely to be affected, particularly in the UK.”

The sharp fall in demand in the City could be a problem for developers behind the number of new buildings planned in the area. There is about 7.3m sq ft of office space under construction in the City, most of which will be completed in 2008 and 2009.