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Much of the City Fringe has been transformed over the last 10 years due to the expansion of the City Core bringing wealth and new developments, which is encouraging the gentrification of the Fringe. This is especially evident in the North and East of London in areas such as Shoreditch, Clerkenwell and Holborn, and to some extent to the south, which are now fully established parts of the London Office (and residential) market.
Now that demand so heavily outweighs supply for both office and residential space there is a real need for new developments, but where is the most sensible place for them? The City fringe offers more space and therefore reduced land and building costs. A previous article written by Morgan Pryce about Canary Wharf spreading east is an excellent example of how new developments are pushing the boundaries of the City into the fringes. Personally I feel this gentrification of previously ‘forgotten’ areas in London is a positive thing; you only have to compare London Bridge now to what it was like 10 years ago to see the improvements that have taken place.
According to Eugene O’Sullivan, “ten years ago the average rent per square foot in Shoreditch was around £8-12, but of course there was very little office space available back then.” Currently prime rents are at £47.50 psf – a difference of approximately £37.50 psf!
The TEA building which is a landmark Shoreditch commercial development is an excellent example of how rents have changed over the years. In 2003, Mother LTD took 44,000 square foot in the TEA building at £10 psf on a 15 year lease; in 2013 Monkey Kingdom took 7,725 square foot at £36 psf on a 5 year lease. It is difficult to make a quality comparison due to the amount of space taken being considerably less and the lease length being shorter – but this is further evidence showing how the property market is changing.
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.