Office rents in the City and Docklands are predicted to fall by as much as 10-12% in the next two years as a result of Brexit.
Although the decision to leave the EU has not hit advertised rents yet, some landlords are already offering extended rent-free periods, as well as discounts of up to 5% if the space has been empty for some time, according to Q3 research by Carter Jonas.
Michael Pain, head of tenant representation at Carter Jonas, said: “Post-Brexit vote, some landlords are offering one to two months’ additional rent-free on a five-year lease, and up to three months’ extra rent-free on 10-year leases is not uncommon.”
Carter Jonas also predicted that tenants of London offices will be able to negotiate longer rent-free periods, reduced advertised rents and larger discounts on advertised rents. Landlords may also be more willing to offer leases with break options.
Rental trend predictions for grade-A space of more than 5,000 sq ft
| Location | Rent Q3 2016 (per sq ft) | Rent Q3 2018 (per sq ft) | Change |
|---|---|---|---|
| St James’s/Mayfair | £125 | £115 | -8% |
| Fitzrovia | £85 | £80 | -5.9% |
| King’s Cross | £82.50 | £78.50 | -4.8% |
| Covent Garden/Strand | £82.50 | £78 | -5.5% |
| Victoria | £77.50 | £70 | -9.7% |
| City core | £70 | £62.50 | -10.7% |
| City fringe | £67.50 | £60 | -11.1% |
| Holborn/Bloomsbury | £67.50 | £63 | -6.7% |
| South Bank | £65 | £60 | -7.7% |
| Hammersmith | £57.50 | £52.50 | -8.7% |
| Docklands | £48.50 | £42.50 | -12.4% |
| Stratford | £45 | £42.50 | -5.6% |
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