The London commercial property market is one of Europe’s largest both in terms of size and worth. Below you will find a wealth of data that provide a snapshot of the market in the UK’s capital city.
London offices account for 20 per cent of the city’s total commercial inventory, with an estimated value of £173bn. The fastest-growing areas in terms of rental growth include Heathrow (which currently already has more office square footage than Birmingham’s CBD) and Shoreditch, a formerly industrial area which is now a hotspot for media and tech companies.
The most notable trends include the growing number of large-scale mixed use developments such as White City (1.3 million square feet) and Nine Elms (0.8 million), and an increase in the number of collaborative and shared workspaces, which are growing at annual rates averaging 16 per cent.
Other noteworthy data include:
Most expensive office fit-out: 54 Brookes Mews, Mayfair, a refurbishment that cost £500 / square foot and totalled £4 million.
Most expensive offices by area: West End £187 – £153 sq/ft, the City £103 – £98 sq/ft, Midtown £111 – £94 sq/ft.
Average office space allocation: 180 square feet for executives, 120 for professional staff, and 100 for support staff.
Key occupiers: creative, FinTech, technology, finance, and media.
Office construction: currently at an 8-year high with nearly 15 million square feet and 120 schemes under construction. The vast majority are in the City (8.8 million sq ft), followed by the West End and Midtown with 1.7 million each.
Pre-let deals for offices under construction: 41 per cent. Pre-lettings by sector: finance (42 per cent), TMT (33 per cent), and corporate (10 per cent).
Investment: prime yields remain below the 2007 peak at 4 per cent. Foreign investors dominate the city’s commercial property scheme since 2015, as overseas investors are behind 70 per cent of all transactions. The majority of overseas investors are from the United States, Qatar, and China.
Most expensive retail space: New Bond Street at £1,055 / sq ft / year.
Fastest-growing rental rates by area: Covent Garden (31 per cent / year) and Sloane Street, with over 27 per cent / year.
Biggest retail investment transaction in 2016: the sale of 137-167 Fulham Road at £45.8million, with expected annual yields of 3.27 per cent.
Retail rental growth is expected to stay stable at around 4 per cent until 2020 for standard retail units in Central London, whereas retail warehouses and shopping centres are set to growth at 1 per cent / year during the same period.
Take-up by area: the West End comes ahead with 4 per cent of all commercial transactions, followed by the City at 3 per cent.
Total industrial stock in London is approximately 30 million square feet, split into more than 3,200 units. The average unit size is 5,000 square feet.
The availability of industrial floorspace has declined sharply in Hackney, Islington, and Westminster (50 to 60 per cent since year 2000).
Most prevalent owner type: local government in Camden, Kensington & Chelsea, Hammersmith & Fulham. Property firms in Islington, Lambeth, Wandsworth, Tower Hamlets, Newham, Greenwich, Lewisham. Private investors in Westminster and Hackney.
Biggest source of demand: retailers, followed by automotive, manufacturing, catering and food services, warehousing, business services, and building / construction-related trades.
Vacancy rates are among the lowest in UK at 3.6 per cent, and record-high rents were achieved in Park Royal, with industrial units being rented for £17.25 / sq ft, followed by Heathrow at £15.50 / sq ft.
Most important deal in 2016: the acquisition of the 2.2 million square feet London Distribution Park by Amazon.