* City office rents tumble 9.5 percent in Q1
* West End office rents fall 11.8 percent
* Landlords under pressure to offer big incentives
By Sinead Cruise
LONDON, April 8 (Reuters) - The amount of empty offices in London's City financial district has risen by a tenth since the start of 2009, pushing the total amount of vacant space to more than 10 million square feet.
A report from broker NB Real Estate on Wednesday showed the total available City office space was now more than 10 million square feet for the first time since 2004 as more businesses downsize to cut rental costs following job cuts.
The available office space equates to about 37 of the iconic "Gherkin" building in central London.
NB Real Estate said City office rents fell by 9.5 percent last quarter to 47.50 pounds per square foot, but the fall in City office rents has been outstripped by an even faster deflation of rents in London's West End business district.
Rents in this area, once heavily populated by high-spending hedge funds, have fallen 11.8 percent to an average 75 pounds per square foot in the last three months, against a third-quarter 2007 peak of 135 pounds per square foot.
"Sentiment wise, this has probably been the toughest quarter in the leasing market," said Alan Dornford, managing director in the Markets division at NB Real Estate.
"Many landlords have been aggressively adjusting the rents they quote but in isolation, this will not stimulate a recovery. ... This will see the best buildings let but at the expense of more second hand space being returned to the pile," he said.
Besides dropping headline rents, landlords are also being forced to offer higher value incentives to persuade tenants to sign new leases.
On Tuesday, UK property company British Land -- one of the biggest office landlords in the City -- said it had agreed to offer Bank of Tokyo-Mitsubishi UFJ and Mitsubishi UFJ Securities International a four-year rent free period to take space at its Ropemaker development.
More optimistically, the report suggested investment demand for London offices has started to rally, after average yields hit 7 percent in the first quarter, compared with 5.5 percent to 5.75 percent a year ago and 4.5 percent at the market's mid-2007 peak. (Reporting by Sinead Cruise; Editing by Andrew Macdonald) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)