Commercial Rents Rising in the Capital

Thursday, April 21, 2011

One thing tenants should be aware of in 2011 is at some point you will be receiving a rent increase from your Landlord.

One thing tenants should be aware of in 2011 is at some point you will be receiving a rent increase from your Landlord. Rent increases are always a vexation especially for tenants who are trying to save money or cut back on costs, but the current market conditions are exacerbating the situation.

London commercial property for rent performed better than expected in 2010. City AM quoted ‘ Over half British tenants expect rent to rise over the next 12 months new figures from rightmove show.’ With offices in prime central areas appreciating by more than 20%.

A survey by Jones Lang Laselle has revealed business property located in the West End commanded letting values increasing by 18%, while city locations saw costs jumping 22.2% to £55.00 per sq ft.

Commercial Property rent is set continue to increase this year, with stock markets strengthening so far into 2011 and some confidence returning to the economy. Demand for investment property is also pushing the cost of Grade A space in the West End as high as £95 per sq ft for good size offices.

Cushman Wakefield also agreed that due to the squeeze on supply of good quality investment stock, the outlook remains strong for further international activity during 2011 and they predict further increase in prime headline rental growth.

Overseas investors continue to dominate the market. Strong rental growths, London’s position as a leading International financial centre, and the resilience of prime assets as secure income producing asset all make it very attractive to investors.

According to a commercial update report from property consultants Cluttons investors are demonstrating their confidence in the market.

‘Availability of Grade A space continues to fall and the decline in new supply projected over the medium term will further restrict availability. With many lease expires due over the next years and a drop in supply over the same period, the market is likely to continue to favour landlords, with further upward movement of Grade A rents as occupiers fight for quality office space.’

Source: ask-re The Property People LLP