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Morgan Pryce recently completed an acquisition of 1,250sq ft of office space in the heart of Moorgate of the city. The current tenant occupying the space was offering a sublet of 3 years to July 2016 for an extremely low rent. After a handful of negotiations Morgan Pryce managed to achieve £3 per square foot off the quoting terms along with 5 months’ rent free period, an extremely healthy rent free for such a short term certain.
With the rent achieved in the low 20’s and a healthy rent free period, you would expect to be looking at £35 to £40 per square foot inclusive. However, offices in the city rents still seem to drop and consistently achieve in the low 20’s. On the other hand, business rates and service charges remain high. The business rates were last set in 2008, right at the top of the market when the property market was booming and rents were readily being achieved at £35 to £40 per square foot, but since the government has now pushed back plans to re-assess the business rates, they still remain in the late teens, early 20’s valued off the 2008 rate able values. The service charge is another cost which will remain high in the City. Most office buildings in the city will have at least one lift and usually has a receptionist in the lobby which immediately pushes the service charge towards the £10 per square foot mark.
Tom lax from Morgan Pryce believes the best deal in Central London is in the City; ‘as the tech boom is happening and everyone is looking for the converted warehouse space of Shoreditch, the modern conventional office space of the City has seen much less demand, resulting in falling rents. The new skyscrapers being developed has also led to the larger tenants holding off their move in to the new space which has therefore delayed everyone else moving which results in rents dropping significantly.’
Morgan Pryce is 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.