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The one thing that is certain about the commercial property market is that it’s never static. This means it’s difficult to predict trends and that it can take a while to establish patterns, particularly as the time of year can have an effect on the figures.
A factor that now appears to be having an influence over occupation rates is the proliferation of serviced offices in the capital. These offer a flexible alternative to the traditional lease, and they have gained popularity across the board, from start-ups to multinationals. Many prospective tenants and businesses remain optimistic yet cautious and the serviced office works well in this climate. The expectation that the popularity of this rental set up will continue throughout this year has stepped up the competition between serviced office providers, meaning that the sector may to an extent have become a victim of its own success – at least in some areas of the capital – to the benefit of tenants.
The rise in serviced office providers has led to tenants having a greater range of properties and deals to choose from. In addition to the well-established providers, there are also landlords who have decided that the serviced office model is the best way forward at present and such landlords have converted their properties accordingly.
This means, for tenants in many areas of the city, that discounted rates and rent-free periods are offered as landlords try to raise the occupancy levels of their own properties. It also means that it is the uncompromising, higher quality properties that will be snapped up by tenants.
The one area of London that seems to be bucking the trend for lower-priced serviced office rates is that around The Shard building and redeveloped London Bridge, where rates for serviced offices were up last year by 35%, according to London Offices. It is thought that the very presence of The Shard and the value added to the area by regeneration and investment has raised the profile of the area and thus its desirability.
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.