West End office rents forecast to double as financiers vie for top addresses
West End super-prime office rents could double to a high of £300 per sq ft by December next year as demand outstrips supply for the smartest addresses, according to a top property expert.
Simon Knights, head of the West End agency at BNP Paribas Real Estate, said: “We predicted last year that leasing events, business growth plans and the importance of employing talent would drive the market and all the cynics accused us of being terrifyingly optimistic, and look, we’ve seen rents of over £200 per sq ft regularly discussed on prime buildings.”
Currently, prime West End rents stand at £150 per sq ft, up 7.1 per cent year-on-year.
Take-up of office space in the heart of London climbed to 746,000 sq ft in the third quarter ending in September, from 520,000 in the previous three months, while vacancy rates stand at less than 6 per cent.
The banking and finance sector is driving occupation, Knights said, with the race for space becoming “increasingly more heated and competitive”.
He added: “These occupiers seeking out these new premises are less concerned by physical occupancy and are more much enlivened by location, talent, status and growth.”
A handful of financial sector deals have demonstrated the soaring demand. Over the past year Blue Owl Capital, a US alternative investment asset manager, has increased its office space 475 per cent — from 2,000 sq ft to 11,500 sq ft in Mayfair. TA Associates, a private equity firm, went from 8,000 sq ft to 36,000 sq ft, at Devonshire House overlooking Green Park.
Knight said: “Office-based employment growth statistics, the aggressive expansion of the financial sector and how it compares against the pipeline of stock is massively important to this success story, regardless of whether it slows down or not.”