Rents in every part of central London are expected to fall over the next two years, although business rate rises have increased total occupancy costs by as much as 18% since Q2 2016.
Carter Jonas’s latest London Office Market Update showed that business rates in the City fringe have risen by as much as 53%, pushing annual occupancy costs in areas such as Spitalfields up from £92.50 per sq ft in Q2 2016 to £100.50 per sq ft.
Annual occupancy costs in prime West End – the most expensive in central London – have, however, fallen by 7.3% in the past 12 months to £177 per sq ft, according to the report, which analyses rents, business rates and service charges.
While the cost of occupancy rises, occupiers are able to negotiate one to three months more in rent-free periods than before the EU referendum, with Docklands seeing the highest typical rent-free lease at 23 to 26 months over 10 years.
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