“Aggressive” rent cuts have brought City and West End office space within reach of more businesses.
Businesses can currently secure office space in the City of London and the West End for bargain prices, as more and more landlords cut rents to attract tenants.
According to a report from NB Real Estate, office rents in the City have fallen by 9.5 per cent over the last quarter. This brought the average cost down to £47.50 per square foot.
Meanwhile, the cost of renting office space in the West End, which was once the preserve of hedge funds, has slumped even more dramatically. NB Real Estate detected an 11.8 per cent decline in rents, bringing the average price down to £75 per square foot.
Alan Dornford, managing director of the markets division of NB Real Estate, attributed the trend to landlords who have “been aggressively adjusting rents”in a bid to let their buildings.However, despite these moves some 10 million square feet of City Office space is now unlet, as more and more companies move to less centrally located areas in a bid to cut costs. This is the highest level since 2004.
Nonetheless, demand from investors remains robust, fuelled by a rise in average rental yields. This hit seven per cent during the first quarter – up from just 5.5 per cent during the same period last year and well above the figure of 4,5 per cent at the peak of the market in 2007.
Tags: city of london, City office space