City office rentals rising at rapid pace
OFFICE rents in the City have advanced at a record pace this year, rising by nearly 12 per cent in the last quarter and by almost 25 per cent since January, says research out today.
Average rents for grade A offices increased from £47.50 per square foot in the first quarter of 2010 to £53 per square foot by the the end of June, according to figures from commercial property agency NB Real Estate.
The jump represents the strongest six months since 1988, when the firm began recording rent levels, though charges are still well below the peak of £69.50 per square foot seen in 2007.
NB Real Estate’s director of city offices James Gillett said: “Two successive quarters of such strong rental growth is without precedent. It underlines just what a rollercoaster ride the commercial property market and the City has been on during the last two years.”
Price hikes are set to become more frequent as high quality space is snapped up.
Available office space in the City has declined by 28 per cent in the last year, with around 9.4m square feet on offer in 2010’s first quarter.
Prices in other parts of London are also skyrocketing. Canary Wharf rents have leapt by a third since the start of the year, while rents for Docklands offices rose 6.7 per cent in the three months to 30 June, to £40 per square foot.
Yields on City office rents have fallen from from seven per cent to 5.25 per cent over the past 12 months, in part due to an influx of foreign investors and the expectation of soaring rents.
FAST FACTS | OFFICE RENTAL
● City office rents have risen by 12 per cent in the last quarter, and 25 per cent since January.
● Available office space in the City has declined by 28 per cent in the last year, with around 9.4m square feet on offer in 2010’s first quarter