Rental growth for grade-B office space in the capital has “gained momentum”, according to analysis from tenants-only agency DeVono.
In the firm’s latest paper on the London office market, it said there was “significantly more movement” in the second quarter of the year compared to the first, with seven submarkets registering quarter-on-quarter increases.
Liverpool Street and Bank led the rises, with grade-B rents up by 5% at £55 per sq ft. Rises of 4% were seen in Shoreditch, Old Street, London Bridge, Waterloo, Midtown and Victoria.
In Southbank, grade-B rents have hit a record of £62.50 per sq ft, with records also set in Clerkenwell and Farringdon (£70 per sq ft).
For grade-A space, fresh records have been set in Mayfair (£150 per sq ft) and Soho (£105 per sq ft).
“We believe that there is still room for further rental growth in 2024 and 2025, especially with grade-A spaces,” the agency said.
“The main factor in this is the continued push towards securing space in best-in-class buildings.
“Amidst reports that a significant portion of the office stock in central London is not meeting EPC requirements and that businesses are pushing to meet their ESG goals, many firms are more than willing to pay higher rents to secure the most sustainable spaces.
“Furthermore, talk of a green premium has filtered through to landlords, encouraging them to remain bullish on rents, creating further rental pressure.”
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