Prime office rents in London’s square mile are now higher than at their 2007 peak, according to new research from Knight Frank.
City office rents at the end of Q1 stood at £65 per sq ft, compared with £63.50 per sq ft in Q3 2007.
This new peak has been caused by a combination of rising demand, falling supply, and a diversification in the occupier base.
Demand for offices reached 9.3m sq ft in the 12 months to the end of March, compared to a 10-year average of 6.8 m sq ft. Demand for 2007 was 8.4 m sq ft.
There was 6.8 m sq ft of available office space on the market at the end of the quarter, down from 10m sq ft a year ago.
Dan Gaunt, head of city office leasing at Knight Frank, said: “Given this landlord-friendly scenario of diminishing supply and above average demand, we see rents rising further. Prime rents could draw close to £70 per sq ft by year end, if the economy continues to grow at its current pace.”
