London office lease prices increase.
London office developments cause rise in leasing prices.
Constant construction and development of office towers is having a knock on effect on office leasing prices.
With so many projects underway rental prices have seen a steady increase, however there isn’t a surplus of office space being produced as companies are quickly snapping up contracts for the new buildings.
New developments include the Shard, the Walkie Talkie tower, Heron Tower, the Cheese Grater and the Stealth Bomber, all of which have experienced a healthy leasing percentage rate.
Office leasing costs are expected to reach £55 per square foot by the end of the year which would be a 26 percent increase from the £43.50 price at the end of 2009. Take up on office space has also remained strong with an overall total of 5.7 million square feet of office space being acquired so far this year.
London office leasing demands have seen a steady increase thanks to a combination of a limited supply of space on the market in the capital and constant demand for new offices from companies in the financial sector.
“Strong demand from financial services and [a] slowdown in the supply of new space created a perfect cocktail,” commented Phil Tily, managing director of IPD in the UK and Ireland.
Companies like Morgan Stanley are maintaining a positive outlook for the future of London office space as they expect an 8 percent rental growth in 2011.
“We think that in 2011 London offices will be yet again the strongest-performing asset class,” commented a spokesperson from Morgan Stanley.