Office lettings dive on financial firms' fears

London office lettings last year fell to their lowest level since the collapse of Lehman Brothers as jittery financial services firms sat on their hands, new research suggested today.

Companies took up nine million square feet of new space last year, a 38% fall on the 14.4 million occupied in 2010 and the lowest since 2008 when 8.1 million was taken up, BNP Paribas Real Estate said.

The gloom chimes with a host of updates from London's biggest property firms, who reported a hiatus in activity over the summer as fears over the economy mounted and Europe's debt crisis took a turn for the worse. Central London managing director Dan Bayley said: "2011 was notable for the lack of activity by the financial services sector, particularly in the City."

City letting activity fell away in the final three months of last year with take-up of less than one million sq ft, well below the quarterly five-year average of 1.3 million.

"If you look at the 25 largest deals in the City during Q4, only one transaction involved a pure financial business and there was not a single deal involving a lawyer," Bayley added.

The West End also saw limited activity but rents rose steadily to average £100 per sq ft due to the shortage of high-quality office space, the research showed.