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Lately, the commercial office space market has seen a steep increase in the costs for West End space. The all-in cost for occupiers taking Grade A space in the West End is now nearly £220 per square foot – a massive £100 per sq. ft. more than the same grade of office space in the City of London.
When the three main annual commercial property costs are considered – Rent, Business Rates and Service Charge – for new grade A space, located in prime West End areas, occupiers can be faced with a bill of around £217 per sq. ft., a figure that has increased with 16.1% in comparison to 2015.
In stark contrast, tenants in the core City market can expect to pay around £113 per sq. ft. for the same styled space. This equates to a difference of £104 per sq. ft. from market to market. However, this cost is still up in relation to 2015, by £85 per sq. ft. – an increase of 23%.
The high all-in costs facing occupiers in the West End is partly due to the shortage of space available on the market. St James has seen record rental levels, with the top deal in the market going for £185 per sq. ft.
Eugene O’Sullivan, Managing Director at Morgan Pryce, said: “There are ramifications of these huge costs on the markets as a whole. The high demand for space in the West End has far outweighed the supply, and as such rents have increased astronomically over the past 18 months.
“As a result companies have now started looking towards alternative locations, such as the South Bank, City Fringes and even to the City itself. These areas have also experienced rental growth, however the all in costs are still well below those available in prime West End locations.”
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.