Central London office rents have gone through the price barrier set before the “credit crunch” in the last economic boom time. Demand for space in central London is soaring according to a recent report in the Daily Telegraph.
Recent Savills research shows that companies are having to pay an average of £55.44 per sq ft, to lease an office building in London, which has increased from an average of £51.56 per sq ft in 12 months.
Increasing demand for space in London’s fashionable West End is pushing up the average prices of both commercial and residential property as developers compete with each other for a limited amount of available space. In Mayfair, one of the most fashionable and expensive parts of London rents were reaching £150 per sq ft in the first three months of the year – a record high.
The new technology and IT industries are the main ones creating the demand for office space in these inner parts of the capital which has propelled rents to these new highs.
The average rent for the premium spots in London’s traditional financial district, according to Savills’ figures, went from last year’s record of £64.08 to £64.46 in the first quarter of 2015.
Last year saw the The City of London have its busiest year ever with 8m sq ft of leasing activity and some high-profile acquisitions such as that by Brazilian billionaire Joseph Safra purchasing the iconic Gherkin building.
Mat Oakely, of Savills told the Telegraph:
“The commercial property market [including offices] bottomed in 2009 and it’s been growing ever since.
“Rents are higher than they’ve ever been, as there is a shortage of space.”
“Until now very few companies have had the opportunity to own their own building, he added, but the model is changing. The Chinese developer ABP is building a new financial centre at the Royal Albert Docks and will be selling space directly to the occupier.”
Business districts are shifting, with demand growing in Hammersmith, Victoria, Earl’s Court and Vauxhall, and companies are now occupying buildings to attract a young workforce.
“Millennials want collaborative space – bike sheds over meeting rooms, and being near leisure facilities,” says Craig Hughes, head of real estate at PwC.
Demand for Space in Central London is Soaring & Office Rents at Record Levels – http://t.co/dtw7reDlDy
— LandlordZONE® (@LandlordZONE) July 7, 2015