After the first quarter of 2009, the market feared widespread tenant disposals, lengthy voids on new stock, falling demand and rental reductions continuing well beyond 2010. Commentators speculated on a flood of bank distressed product being delivered into a market characterised by cautious investors, no debt and rising yields.

The outcome was actually very different. Take-up rose in the City and, across London, the second half of the year saw more than double the volumes of the first half. There were supply shortages for particular product types and tenant demand actually increased – and became more confident. There was also evidence of lease terms hardening and tenant competition returned. The investment market was characterised by a dearth of supply and hungry investors – driving a 150 basis point yield compression for certain lot sizes.

This was a remarkable turnaround that few would have predicted. But 2009 was not a good year statistically, it was simply much better than feared: Take-up, whilst improving was below average, overall supply increased but at a slower rate than anticipated and demand, whilst improving, remained lower than 15 months ago and rents in the wider Grade B market continue to be a significant challenge.