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Increasingly, it has been seen that companies are choosing to locate south of the river, acquiring new office space in SE1. A large factor as to why offices in Southbank have become so appealing is rent: so many of Central London’s key areas, such as the West End, achieve comparatively high rents – it is not unusual to see offices in Soho reaching £57 per square foot, and even £92 per square foot in St James’s. As a result many businesses have felt priced out of more popular and traditional areas, and have instead decided to move south. Here, prime space, such as offices in London Bridge, are currently achieving lower rents – for example £45 per square foot.
Recent development within Southbank has transformed the area, making it an increasingly desirable location. The landmark Shard building and the upgrade of London Bridge station have undoubtedly contributed to the attraction of new business to the area. Some of this new development has provided new Grade A offices, while improved transport to Waterloo and London Bridge Station has garnered more interest from companies considering relocation. These factors have to some extent resulted in a rise in the rents when leasing an office in or around Southbank, as many still consider that in comparison to other parts of the capital there remains a limited amount of prime Grade A office space in this area. So, while the rents can be much less than in other prime areas, the high demand and relatively low current supply indicate that robust rents will continue to provide a strong return for an investor.
And there has been a noticeable increase in investment, although it is not necessarily widespread across Southbank. Rather the investment has targeted offices in Southbank in specific areas. For example, in comparison with London Bridge’s £45 per square foot, offices in Bermondsey have only recently managed to achieve £35.00 per square foot. New office development, such as the vast ‘More London’ campus at London Bridge has also dramatically reduced the percentage of second-hand offices in the area. This new office space is expected to achieve higher rents, providing higher returns and in turn attracting investment.
Development in the vicinity is expected to continue, with a new development project recently having been granted approval by Lambeth Council. It is to include the complete redevelopment of the Shell Tower, totalling 27 storeys as well as eight new buildings, one of which alone will include 245,000 square feet of brand new office space. The development will also feature a series of new homes, retail space and improvement to public areas as well as access to the London Eye. To be known as Braeburn Estates, the site is located adjacent to Waterloo Station and is forecast to create more highly sought-after Grade A office space in order to satisfy demand.
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.