Office Rents Return to Pre-Recession Levels

Recent research by Jones Lang LaSalle indicates that as a result of the new office relocation demand and lack of new grade A office space, office rents in most major UK cities are close to their pre-recession levels.

Office rents in Cardiff, Edinburgh, Glasgow, Manchester Central and the Thames Valley from June 2014 have all passed those of late 2007, considered to be the previous peak of the market, prior to the UK recession. Office rents in Bristol and Leeds have previously matched those of the fourth quarter of 2007. Birmingham is the only city where office rents are still lagging behind the 2007 peak.

In central London, the City and the West End office rents for Q2 2014 were just below their 2007 peak. Rents for the City are £6 psf below and rents for West End are £10 psf. below their previous high point.

The two London markets were hit the worst by the financial crash, with rents in the West End falling 34.7% to £75, and rents in the City dropping 31.8% drop from late 2007.

Monthly letting analyses by Cityoffices.net and Metropolis suggest that in some cases individual deals are already surpassing previous peaks with KPMG rumoured to be paying £125 psf for a move to 18 Grosvenor Street, W1 and Golden Tree Asset Management paying £115 psf for a move to 33 Davies Street, W1.  In addition, rents at 20 Fenchurch Street (Walkie Talkie Building) in the City are rumoured to be topping £70 psf.

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