Following the aftermath of London 2012, it is encouraging to note that forecasts for office rentals in the capital are largely positive in 2013. With expected growth of three per cent, as predicted by Savills, it poses the question: what areas are expected to benefit most?
Commercial developments are widely expected to be on the increase, largely due to encouraging growth in London’s technology and media telecommunications sectors. The capital’s very own ‘Silicon Roundabout’ on Old Street is fast becoming an influential area for innovation akin to its San Francisco-based namesake.
Old Street is set for a much-needed revamp with a £50 million government investment set to transform the tech hub, with 3D printing labs and facilities for small start-ups. Global conglomerates such as Google and Microsoft are fast increasing their visibility in the area and the development, expected to be Europe’s largest indoor civic space, will provide capacity to train thousands of tech students.
Additionally, there is a clear disparity between West End and City rents, with media and service sectors increasingly choosing to migrate to cheaper fringe areas of London such as Shoreditch, Clerkenwell and Farringdon.
Indeed, in February 2013, London’s West End officially regained the crown for being the most expensive office space market on the planet. The title, which was previously held by Hong Kong’s Central Business District, has resulted in increased rental prices due to heightened competition for prime rental premises.
According to a market trend report, “Commercial Edge London”, rents for new Grade A office space in prime locations such as Mayfair and St James’s have risen by up to 33 per cent since the London office market bottomed out back in 2009. Rents are now widely available at over £100 per sq ft per annum.
Phil Hodgkinson, manager of Club Workspace, a co-working offering from Workspace, said: “There remains a genuine demand for multi-purpose and accessible office space for new and growing businesses in London looking to make an impression whilst keeping overheads to a minimum.
“Serviced offices continue to make a very attractive proposition for entrepreneurs and new business owners with all the amenities in place to hit the ground running from day one.
“In Central London alone, office take-up in Q1 2013 was the highest quarterly total since the end of 2010 and this market momentum is expected to build further as the year progresses.”
However, the outlook for Central London office sub-markets is expected to remain unsettled, at least until there is a period of sustained economic growth. In the meantime changes in working practices such as hot-desking and co-working are having an impact on the amount of floor space required as firms seek innovative ways to trim operating costs and the amount of office space they need.
‘London office trends to watch in 2013’ was written by Philip Hodgkinson , manager of Club Workspace, one of the fastest-growing networks of creative co-working business clubs across London.