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Over the last five years, the City fringe has seen a huge increase in rental values, with landlords providing very few incentives. Many of the offices are owned by income-driven private landlords, who have seen their rents double; all thanks to a tech start-up boom and the basic economics of supply and demand. Vacancy rates were approximately 4% in 2015, are now a comfortable 6.5%, and with just over 1.1 million sq ft of new stock under construction, are set to rise still further. New schemes such as One Bartholomew Close, due to be delivered in 2018, will add to the supply and put further pressure on landlords to do softer deals in the tenants’ favour.
Despite falling rents and increased incentives, the demand remains high in the City fringe, with Box.com taking the top two floors of the White Collar Factory in Q3 2017, consisting of circa 25,000 sq ft at a rent of £75 per sq ft. The NEX Group have taken 111,602 sq ft in the Fruit and Wool Exchange, and deals by AECOM, Uber and WeWork in the Aldgate Tower show continued uptake strength, while global names such as Amazon taking 500,000 sq ft in Principal Place demonstrate the sustained healthy demand from the tech sector.
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.