Rents expected to soar in the West End

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by Kay Murchie

According to estate agents Knight Frank, commercial rents will fall in the City but will continue to increase in the West End over the next 2 years.

Knight Frank predict that West End rents will increase to £118 a square foot next year after rising from £110 to £115.50 this year.

The agent is also forecasting that prime rents in the City will remain the same this year at £63.50 per square foot before falling 1.5% to £62.50 by the end of next year.

In spite of concerns of a crisis in commercial property, it is likely the market will see ‘a correction not a calamity’ added the agent.

James Roberts of Knight Frank said strong demand and a lack of space continue to make the West End the most expensive office market in the world, this area is not showing any indications of vulnerability.

Mr Roberts added that a shortage in supply is providing protection against the cooler economic environment. In spite of what people think, the fund managers and private banks in Mayfair and St James’s are still occupying office space.

The next 2 years will be challenging for the City as the balance of the market is leaning towards the tenant. However, the market is not flooded with sub-let space from banks which was the case in 2002 and 2003, concluded Mr Roberts.