Sustained rental value growth has been the predominant theme in the London commercial property market during the first quarter of the year. On the whole, Q1 2017 can be described as positive and with no significant changes with regards to the previous quarter.
London Office Market Q1 2017
Take-up rates in Central London doubled in Q1, reaching 1 million square feet in February. These were particularly high in Southbank, where vacancy rates dropped to their lowest point in the past 18 months, reaching 3.3 per cent. Central London take-up by sector remains unchanged, with media and tech occupiers on the lead, followed by the public sector, finance, and business services. Grade A vacancy rates ranged between null values in Aldgate to 15 per cent in Holborn.
Total availability increased by 4 per cent to 14.7 million square feet, although most supply is clustered around King’s Cross, Paddington, Stratford, and London Bridge.
Rental values grew by 0.2 per cent across the city. The lowest average rents are currently £40 / sq ft in Stratford and £47.50 in the Docklands, whereas the highest are in St James and Mayfair (£110 / sq ft), Soho, Belgravia, and Knightsbridge, ranging from £85 to £87.50.
However, the introduction of higher business rates in April may reverse the generalised upward trend. This will be most evident in the legal sector, which has also been affected by increases in annual rent costs, reaching 5 per cent over a five-year period. The business rates revaluation may lead to a decreased enquiry volume in sub-markets affected by the sharpest increases, namely Clerkenwell, Camden, Shoreditch, King’s Cross, and West City. Continue reading “Overview of the London Commercial Property Market 1st Quarter 2017”
