Prime rents in London’s City district are on course to finish 2013 at £60.00 per sq ft, up 9.1% on the start of the year. Knight Frank Research is forecasting office take-up in 2013 to be 6.9 m sq ft, up 19% on 2012 and well above the long-term average figure of 6.4 m sq ft per annum.
This confirms that the City has benefited from a range of measures to boost the London economy. These include expanding the City as a market for trading the Chinese currency, the Renminbi, and developing an inner London IT hub, known as Tech City.
William Beardmore-Gray, Head of Knight Frank’s City office, commented: “The last three occasions City prime rents moved into the sixties – in 1989, 2001, and 2007 – the economy was in the final stages of an economic cycle. Today we have rents at £60.00 per sq ft at the start not the end of an economic cycle, and consequently I expect City prime rents to reach £65.00 per sq ft in the next year.”
James Roberts, Head of Central London Research commented: “the City now has a broader range of tenants driving demand. Technology, Media and Telecoms firms were the largest source of office demand in 2013 – accounting for 38% of take-up, compared to 17% for finance – while more corporate occupiers are moving to the City. This has reduced dependence on the volatile financial sector, and will provide a firmer foundation for growth in the City’s economy.”
Dan Gaunt, Head of City Leasing team at Knight Frank said: “An increasing number of companies that activate office requirements now are defining the search area more as ‘Central London’ rather than ‘City’ or ‘West End’. This is because many of these new and fast growing companies are not burdened with historic prejudices about the City. Consequently, the City now finds itself in the running for a greater number of office searches, to the backdrop of a growing economy. This will further drive office rents.”
