BoE scheme may boost demand for office space

The level of demand for offices to let in the UK rises and falls depending on a range of factors. For example, the amount of credit firms are able to leverage can have a bearing on the take-up of offices to rent. With this in mind, interest in office space may go up in response to measures announced last month by the governor of the Bank of England (BoE).

During a Mansion House speech, Sir Mervyn King revealed that the central Bank and the Treasury were developing a scheme designed to boost lending by banks to companies and individuals in an attempt to bolster the country’s economic prospects.

The point of the initiative is to help the UK’s commercial banks borrow more money and at cheaper rates. This in turn should make it easier for enterprises and consumers to access money.

It is hoped by those behind the so-called Funding for Lending scheme that it will stimulate tens of billions of pounds of extra lending on a pound for pound basis. In other words, for every pound that is raised by the commercial lenders, an extra pound will be provided to borrowers.

Some of his money may be used by companies looking to expand and find larger offices to let.

The enterprises that do go in search of new offices to rent may be inclined to choose premises that are available on short-term and flexible leases to help ensure they are able to respond to changes in the economic climate more easily.

Meanwhile, responding to the BoE scheme, John Cridland, director-general of the Confederation of British Industry, described it as a “sensible pre-emptive move”, adding that it will provide new liquidity to banks during a period of “eurozone-related turbulence in the financial markets”.

However, he went on to state: “The… scheme will need to be practical for banks to participate, offer lower funding costs than found on the markets and most importantly, be easily accessible to small and medium-sized businesses who will be the backbone of our future economic recovery.”

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