London Office headline rent to remain static, with rent free periods to reduce overall office rental costs
In this frustratingly stagnant economy, you’re probably wondering in which direction the London office rental market is headed. I’m nailing my colours to the mast by declaring that London office costs will drop in the months ahead.
It’s more complicated than that of course: the headline rent figures will remain the broadly the same, but – critically – rent free periods will be longer, reflecting weaker demand for medium quality London office space, with the overall cost of office rental falling over the first 6 months of this year at least.
Of course it’s even more complicated than that! Office rental costs differ from one Central London area to another? Rent for prime Mayfair and St James’s office space, which continues to be short in supply, will defy gravity.
Unsurprisingly, the most common questions we get asked by our clients concern the markedly different rental values across the capital.
What annual cost saving could be achieved by relocating from St James’s to Victoria?
Sounds simple doesn’t it, but – you guessed it – it’s more complicated than that! And I’ll do my best to explain why: there are 3 main considerations:
- All Central London commercial districts can be divided into prime areas and less desirable areas.
- Buildings vary hugely in quality: from musty basement space off Oxford St, to glamorous HQs overlooking Berkeley Square
- Reported rent rates and service charges are different in practically every building!
It really is a minefield!
Brand New London Office Rental Guide for 2013
Having said that, tenants need a rule of thumb, so we have just published our improved 2013 London office rental guide. It gives a snapshot of rent, rates and service charges in 18 key Central London office locations. We have just added 2 new districts: Marylebone (which should really have been on our list already) and “Silicon Roundabout”, London’s new dynamic technology hub in and around Old St Roundabout.
Each district has a spot figure, which reflects high quality air conditioned (but not brand new best) office space. Naturally there will be far cheaper, and more expensive office space in each area.
Our Office Space Calculator also uses the same data, so rest assured you’ll have access to the most up to date information.
We will be updating the guide every three months. We’ll be adding some new features to the guide each time we update it. I’ll be blogging some analysis of the broad rental trends. We’ll also be retaining and publishing historical data, so we’ll soon see whether rents do stay the same, as I’ve predicted.
Disagree violently with my prognosis? Feel free to comment below: