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Morgan Pryce have just completed on 3,000 sq. ft. office in Southwark on behalf of an architecture firm. Morgan Pryce managed to negotiate £1.50 psf off the rent along with 7 months’ rent free and a large capital contribution to refurbish the floor into Grade A spec. This deal represents two very interesting points, one of the current market and secondly of the importance of being represented.
Firstly the market; the terms of the deal were agreed pre-Christmas in November time, and as stated above Morgan Pryce managed to negotiate 7 months’ rent free, £1.50 psf off the quoting rent and a further capital contribution for the space. These terms 5 months ago were extremely standard in the market, especially in Southwark where there was good supply and not as high demand, 5months later and it’s all change. The rent is now consistently creeping into the £40’s psf with the majority of buildings going to a best bid situation as potential tenants battle it out to secure the very limited space now available in the area. With more and more tenants looking to move to the increasingly desirable SE1 coupled with the supply problems across the whole of the market, rent is again being pushed up with rent free being squeezed, with the deal achieved in November now looking very desirable in deed.
Secondly, the importance of being represented. The Central London office market is forever changing and what appeared to be a standard deal in the market 5 months ago is now looking to be very attractive in deed. It is the quick changing nature of the market that allows agents to advice their clients how strong to push for a deal and when to agree to lower terms to simply secure the space. When agreeing our terms back in November we were in a battle straight away as we learnt the floor below us had recently been let to an unrepresented media firm who had paid quoting rent and achieved no rent free. It is important to remember that the letting agents are employed on behalf of the landlord and are therefore paid by him, without the proper representation in negotiations incoming tenants may agree to terms which they thought were good but in fact very much below the standard in the market at that time.