Rents in London’s main office districts have broken a two-year freefall to hold steady in the fourth quarter, after declining as much as 50 per cent from their peak in late 2007, a report showed yesterday.
Average headline rents for offices in the City financial district are now at £42.50 (S$96.2) per square foot, and at £65 and £30 for the West End and Docklands respectively, commercial property agency NB Real Estate said.
‘Headline rents only tell part of the story … in Q3 the talk was of the four years rent free that Nomura were believed to have negotiated for taking a 20-year lease from UBS at Watermark place,’ James Gillett, director of City Offices at NB Real Estate, said. ‘There is no question that this marked a high point for incentives and landlords are taking a much firmer line now.’
The vacancy rate for London offices has also improved, with unoccupied space in the Docklands falling to 10 per cent in the fourth quarter, from 14.2 per cent in the previous three months.
Many investors have warned of a short-lived recovery for Britain’s commercial property market, Europe’s second-largest after Germany, if values rise too quickly without growth in the economy and rents.
‘While capital values have recovered significantly over the past nine months the fact that there is now hard evidence of an improvement in the fundamentals will support the view that it will not just be another bubble,’ Mr Gillett said.
Source: Business Times, 22 Dec 2009