The central London office market is firmly on the up. With the supply-demand ratio reaching critical levels, particularly in the West End, rental growth is a reality. We asked the market to predict rental levels for the end of the year.
West End
£150 per sq ft “The core West End will look back over 2014 and see a number of lettings over £125 per sq ft, also rents guided at £150 per sq ft for prime leasing opportunities in garden squares with terraces and small, highly specified units in other locations. Buildings to watch as stepping stones to £150 per sq ft and beyond are 28 Savile Row (Allied London/Aerium), 8 St James Square (Green Properties) and 3 St James Square (WELPUT).” Simon Knights, head of West End agency, Strutt & Parker
£130 per sq ft “As a result of the supply-demand imbalance, we expect Mayfair and St James’s rents to be heading towards £130 per sq ft by the year-end, with positive growth filtering throughout the surrounding West End villages.” Stephen Peers, partner and head of West End transactions, Deloitte Real Estate
£115 per sq ft “For the West End, we expect rents to be in the range of £110 to £115 per sq ft for standard floors. Obviously, top floors and premium space will command a higher level of rent.” David Stewart, fund manager, Standard Life Investments Pooled Pension Property Fund
£107.50 per sq ft “Falling supply levels and an expectation of growth in the specialist financial sector will push rents further up in 2014, with levels of £107.50 per sq ft forecast by the year-end.” Phil Hobley, head of West End leasing, Knight Frank
The City
£77.50 per sq ft “I expect £77.50 per sq ft to be the highest rent achieved in the City core by the year-end. The Shard has already exceeded this. Rents in the £70s are likely to be achieved for exceptional small suites or on tower floors such as at the Leadenhall Building and 20 Fenchurch Street. ‘Wow’ space with a roof terrace, such as 70 Mark Lane, is also expected to achieve a premium.” Philip McKenna, head of City agency, Strutt & Parker
£70 per sq ft “Rents are moving forward and, barring election, economic or global shocks, this will continue in the next six to 12 months. In the City, by the end of the year we will see £65 per sq ft achieved for new buildings, with rents of over £70 per sq ft for special units.” Matthew Elliott, partner and head of City transactions, Deloitte Real Estate
£67.50 per sq ft “In the City, we forecast rent to reach £67.50 per sq ft by the end of the year.” Guy Grantham, head of office research, Colliers International
£65 per sq ft “Headline rents at the end of 2014 will be in the region of £62 to £65 per sq ft depending on floorplate size and excluding tower space, which is currently commanding higher rent.” David Stewart, fund manager, Standard Life Investments Pooled Pension Property Fund
£64 per sq ft “For typical single floors, rents have notched up to at least £60 per sq ft from £58.50 per sq ft at the end of Q2 and that £64 per sq ft is likely by the year-end.” Chris Vydra, executive director, central London, City agency, CBRE
£62.50 per sq ft “The City prime rent is now £60 per sq ft, an increase of 9.1% over the last 12 months. By the year-end, we are forecasting the City prime rent to reach £62.50 per sq ft.” Dan Gaunt, head of City leasing, Knight Frank
