Further reasons to be cautious about pace of office rental recovery

The latest data from the CBI and PwC suggest that financial services sector output rose in the final three months of 2010 but that employment fell sharply. What’s more, the fact that headcounts are expected to fall again in the near-term is surely a downside risk to office demand. Admittedly, supply shortages are still likely to push up City and West End rental values to some degree this year. But today’s data, on balance, support our below consensus views on the pace of that growth.