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Economic forecasters have indeed been kept on their toes during the last few years. It would be interesting to see who would have predicted over a 9% rise in commercial property rents over the last twelve months. These are precisely the figures provided by Knight Frank, which shows that rents in London City have reached as much as £60 per square foot.
Rents are only part of the picture. Take-up is also looking positive for investors, up 19% from the previous year to 6.9 million square feet in 2013, significantly more than the long-term average of 6.4 million square feet per year.
Estimates are that rents are yet to reach a peak, given that the UK economy is only just beginning recovery, and given that there is no sign of international investment from the Far and Middle East waning. Added to this is the continuing expansion of the London microeconomy and the vast array and range of businesses that are now based here. The powerful TMT sector ranges from tiny start-ups to giant multinationals, and includes everything in between, and these numbers and varied requirements are driving expansion of take-up into other areas of the capital that were previously overlooked, and boosting rents by way of the ‘ripple effect’.
The TMT – technology, media and telecoms – sector accounted for 38% of take-up this year, whereas in contrast, the finance was down to 17% as it moved some of its operations to cheaper sites outside the capital. It is hoped that this statistical spread will also help contain vulnerability in London’s economy, given the unpredictability of the financial sector after recent years.
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.