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The last time London was crowned the world’s most expensive place to rent office space was back in 2008 when the market was at its peak and just before the collapse of the global financial services firm, Lehman Brothers. Even though Britain has only just lost its triple-A credit rating and there has long been talk of the UK falling into a double- or even triple-dip recession, London has once again regained the title of hosting the world’s most expensive office market at present, which has been noted by the International Real Estate consultancy firm Cushman & Wakefield.
London has managed to beat Hong Kong’s central business district (CBD) in providing the most costly office space. We have seen the average rent of offices in Mayfair creep up to around £52.50–£95.00 per square foot, while a deal was recently struck on Hanover Square at £120 per square foot. The rents of offices in Mayfair are managing to maintain such high levels thanks to the hedge funds, asset manager and private equity companies that are looking to acquire the limited amount of space that is available in the area. With market movement like this, it is no surprise to hear the business secretary, Vince Cable, shrugging off the downgrade of the UK’s credit rating from AAA to AA1 last Friday night and considering it to be “largely symbolical”.
The increase in the cost of office space is very much down to the fact that London has experienced a drop in the supply of office space since developments were halted in 2008 following on from the start of our recession, and we have gradually seen the rents of West End offices to have inflated by around 2%. The average cost per square foot of space in London is now 43% more expensive than in Hong Kong.
“With rents such as these, London may well maintain its position as one of the top safe havens for foreign investments and we possibly even a further boom in the bubble that is London”, comments Christina Weguelin, Agency Surveyor at Morgan Pryce.
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.