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The next 12-18 months of the London commercial property market is looking like the same story as the previous 12 months; a lack of office stock across Central London, which in turn is squeezing rental prices up across the Capital. Indeed, this is not just the case in Central London. Over the last year there has been a total of 6 million sq ft of office space converted into residential across England. This is double the previous record of 3.7 million sq ft converted office to residential back in the boom year of 2008. However, it is in Central London where there has been a real squeeze on stock; over 2.7m sq ft has been lost to residential over the last 2 years, with no real replacements of similar sizes.
Oliver Salter, surveyor at tenant acquisition specialist Morgan Pryce, has seen first-hand how the shortage is affecting prices and tenant decisions in the current market,
“The implementation of office – residential planning development rights (PDR) has led to a massive shortage of stock across the capital, especially between the 700-3,000 sq ft bracket. Any landlord worth their salt would have changed their office into a residential flat which could be worth up to four times the amount of their current asset. This has obviously had an effect on a certain band of companies who will be looking for new office space as there is no new stock replacing the converted spaces. In addition to this, there is a case to be made that this is not having a wholly positive impact on the residential market – who is buying, or investing, in these high priced residential apartments? Many of these spaces lie dormant for months, mainly used as investment tools of the ultra-rich.”
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.