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Has central London’s office market reached the top of its cycle? That is the question all property professionals have been asking for the last 5 months. I personally believe we have plateaued at the top and the final few deals at these extortionate rents will be complete by the summer of 2016. As we begin to see some new stock in the market things should start to cool off. At least we at Morgan Pryce hope so!
We are seeing the lowest ever vacancy rates in London for office stock and on the investment side deals have been agreed on yields sub 4%, yields very similar to those achieved pre financial meltdown. Should alarm bells be ringing another is in progress or are we better prepared this time? I don’t think another crash is imminent but I do believe this is good evidence we are at the top of the market.
There is argument that the peak has been and gone, according to Karen Sieracki (Kaspar Associates) who has produced some of the most detailed research on London office investment for the Property Archive, the evidence for this is the reduction in investment that has occurred each quarter in 2015, by just over £12bn. Investment in the regions during Q3 this year exceeded that in London for the first time in 12 months. UK Institutions were the largest sellers during Q3 this year at £4.4bn with overseas investors a close 2nd with £2.8bn.
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