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Central London has seen a surge in record breaking rents over the last 12-18 months. Core areas are in danger of overheating, is there any room for rents to continue to grow?
St James has seen the most expensive office rental figure ever – £185 per square ft. +. You will now struggle to find space in Shoreditch, Clerkenwell and other City fringes areas for less than £50 per square ft. – this is in contrast of 5 years ago when prices were floating around the £20 psf mark. These incredibly high figures are also in line with the lowest figures the West End and City have ever seen in terms of vacancy rates; 3.6% in the West End and 5.21% in the City, a figure that is expected to drop once the 1 million sq. ft. of space that is currently under offer leaves the market. With vacancy rates decreasing and no let-up in demand, where does the market move to from here?
Oliver Salter, surveyor at tenant acquisition specialist Morgan Pryce, believes there are 12-18 months of a landlord’s market left and tenants are considering alternative options.
“There is currently over 9.6m square ft. of development under construction across Central London at present, however this is not due to come onto the market for at least another 12-18 months. Whilst there is now an increasing market for speculative development, time frames are not in-keeping with current market conditions; in short, demand is far outweighing supply and will continue to do so over the next year and a half. We are seeing more and more clients looking at alternative arrangements for their office space. This is coming in the form of short term serviced office options, or for those looking at leased options, assignment and sub-leases.”
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.