Tag Archives: technology
Canary Wharf set to see strongest office rental growth in central London this year
Canary Wharf is set to have the strongest central London office rental growth in 2016 with an increase of 12.8%, followed by Shoreditch at 10% and Midtown at 9.6%, according to a new analysis. Affordability is the main driver for rents to increase, along with the development of Crossrail, integrating Canary Wharf with the rest of central London, and a general shortage of available offices across London, says the Knight Frank report. This will push tenants seeking high quality affordable offices eastwards, with Canary Wharf well placed to benefit. Expansion by Technology and Creative firms will contribute to the shift, as they are growing fast and increasingly seeking larger offices, it explains. It also says that Shoreditch’s increase in office rents will principally be driven by technology sector expansion. The more mature, established heavy weight tech firms have firmly established a London rival for California’s Silicon Valley in the area, which is set to continue to grow over the next 12 months. Indeed, the technology sector was the largest source of demand for office space in central London in 2015, for the fifth consecutive year, and rents in Shoreditch grew by nearly 24% in 2015, nearly double the 12% increase seen in the neighbouring City Core which is London’s traditional financial district. Moreover, at £65.00 per square foot, rents in Shoreditch have closed the gap on the City Core rents which stood at £70 per square foot at the end of the fourth quarter of 2015. In 2007, Shoreditch rents were £42.50 per square foot, about a third less than the City Core at £63.50 per square foot. Central London vacancy rate levels are at a 14 year low, the report also shows, the lowest since the first quarter of 2001, with the West End at 3.4%, the lowest since 1989. ‘The gap between rents in traditional core areas and other sub-markets has never been so small. Occupiers are making decisions based on quality of product and amenity, availability of scale, adjacency of workforce and not by postcode,’ said Dan Gaunt, head of City Leasing at Knight Frank. According to James Roberts, Knight Frank chief economist, what has surprised everyone is that Shoreditch office rents have got so close to those of the City Core. ‘Everyone assumed the tech firms could not afford rents that high,’ he said. ‘However, the more successful start-ups from five or six years ago have matured into larger, established companies with deeper pockets. They now need bigger, modern, high quality offices, and they can afford to pay to get what they want. It’s what happened in Silicon Valley but there the process took decades, in Shoreditch it has happened in a few years,’ he added. Continue reading
West London prime property market out performs rest of sector in London
Residential property growth in the prime west London market is outperforming the rest of the sector in the city, new research shows. The area starting in Hammersmith and heading west to Ealing saw average property values grow by 4.1% in the second quarter of 2015, leaving annual growth at 0.5% compared to the small falls seen in other prime London markets. The value of properties priced over £2 million, the majority of which are concentrated in Hammersmith and Chiswick, fell 2.2% over the past year, the data from real estate firm Savills also shows. At the top end of the market, buyer caution has been evident, the firm's report says, and the the price falls largely resulted from stamp duty changes announced in the 2014 Autumn Statement and uncertainty surrounding a mansion tax in the run up to the general election. Stronger growth was recorded in the lower value markets, particularly in the £750,000 to £1 million market where buyers benefited modestly from the stamp duty reform. In the prime markets below £750,000 although price growth was positive, it was slower as new mortgage regulations limit the amount buyers can borrow. Average values in Ealing are around 25% cheaper than Hammersmith and Chiswick and consequently saw the strongest growth, of 3.9% over the past year. 'Since the election some of the deferred pent up demand is beginning to flow back into the market, although the new stamp duty rates are still keenly felt by buyers at the top end of the market. This has restricted any significant increases in both prices and transaction numbers and we expect this to continue over the rest of 2015,' the report explains. Nonetheless, Savills is forecasting price growth to return to the market in 2016 and values to rise by 22.7% over the five years to the end of 2019. In the prime west London rental sector average rents increased by 1.2% over the three months to the end of June, leaving rental growth flat on an annual basis. But Savills says that corporate relocations play an important part in the west London prime rental market and are a growing source of demand. Over the first half of 2015 some 67% of tenants were renting due to employment relocation compared to 55% in 2014. 'Over the next five years, the London economy is forecast to continue strengthening, particularly in the technology and telecommunications industries, which will underpin demand for prime rental property over the medium term,' the report points out. However, it also points out that a potential risk to the sector is the level of new stock being brought to the market by overseas investors in certain locations on the fringes of prime London. In west London the largest prime development region is White City, which may lead to rents coming under pressure in the surrounding areas. But, across the prime London markets as a whole Savills expects rents to rise by 17% over the course… Continue reading
