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Property in Mayfair could increase to £15,000 per square foot by 2050 according to a Hamptons International report, pushing Mayfair into the position of London’s prime elite location.
Mayfair has increasingly become the capital’s premier postcode and will see even more investment and development in the future. Development will lean much more towards the residential side and this will contribute to the decline in availability of offices in Mayfair as well as in the West End in general.
Drivers Jonas Deloitte’s Key Cities report has predicted a 10% rise in West End rents. This increase is a result of such a low availability of office space in the West End, especially Mayfair, coupled with an extremely high demand for space. The lowest amount of office space had been completed in 2011 , and although the development of office space is once again on the rise, this investment has been mainly based in the City. Investment has also been largely from overseas cash – London is considered a safe option in comparison to the rest of Europe since the arrival of the European financial crisis. But with the competition involved in purchasing plots in London, foreign buyers are likely to start considering options outside London, in regional cities. Mayfair’s limited office space is likely to remain a long-term issue and therefore competition to acquire space will continue to be intense.
Eugene O’Sullivan, Director and Surveyor at Morgan Pryce, comments that “Buildings in Mayfair are increasingly being converted from office space to residential, just because they are worth so much more as residential.”
Traditional office space replaced by residential conversions
A key example of the decline in office space in this area is the planned conversion of St Dunstan’s House on Fetter Lane, from office space into 76 luxury residential apartments; it has been put on the market by the Crown Estate and HM Courts & Tribunals for £20m. Until August 2011, it had been used as office and court accommodation by Her Majesty’s Courts and Tribunals Service. The loss of office space in this way has been notably happening since 2001 throughout London, but in the West End and particularly Mayfair, the office space has not been replaced. There has been approximately a net loss of more than 350,000 square feet of “B1” office space in the last five years. In Mayfair, the loss of office space is not being compensated for by new developments. Much of the West End, in particular Mayfair, was originally built to host exclusive homes and we now see this use returning, bolstered by the fact that residential space is worth so much more than commercial. Currently, there are around 1.8m square feet of further planning permissions which have been granted in relation to schemes that involve the conversion of offices to other uses and so this trend is unlikely to disappear.
While Mayfair is a prime location, it will become increasingly difficult as a company to secure office space there – the exclusivity and luxury of having offices in Mayfair will be exceptionally high in the future. Tenant agencies will be the main port of call for assistance in acquiring space, using inside knowledge to procure off-market opportunities.
As mentioned by Adam Challis, Head of Research at Hamptons International “Mayfair will take its place as the traditional bastion of wealth”.
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 the tenant.