The cost of renting an office in Central London is set to rise this year as the effect of a two-year development drought finally bites.
Rents for prime space have stabilised at £42.50 per sq ft in the City and £75 per sq ft in the West End. Cushman & Wakefield, the property consultancy, said there had been a flurry of lettings in the past three months that had soaked up much of the existing floorspace, leading to greater upward pressure on rents. The 2.6 million sq ft of space that was let in the last quarter of 2009 was the highest quarterly figure for more than two years — since the third quarter of 2007.
In contrast, the 5 million sq ft of floorspace under construction in London is 42 per cent lower than 12 months ago. Cushman said that pressure on rents had “narrowed the opportunity” for tenants to secure new premises at historically low rent levels and to negotiate incentive packages with landlords.
Most property commentators agree that rents will rise again over the next 12 months, after falling from a peak of £65 a sq ft in the City and £130 a sq ft in the West End in December 2007.
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