Rents Backtrack 20 Years

29th September 09 – Rents backtrack 20 years

Due to the perceived global recovery in economic conditions and more specifically to a dearth of new developments in the City of London, new research by Knight Frank, the UK property agent, suggests that rents in the City will rise next year. Such an event would be ahead of the date of recovery feared until only recently.

Space in the City of London is now available at the cheapest rents since 1989 and in the West End since 1996. The agents found that concerns that there would be a major increase in businesses sub-letting unwanted space have been largely unfounded. The forecast is for City rents to rise by 4% in 2010 to £44 per sq ft to follow the 21% decline this year.

Specialists seem to confirm that the rent trough has been reached. Will Beardmore-Gray, head of City leasing said “The City has seen a marked increase in activity since its low point in quarter one. There is a definite upwards trend in activity emerging – it is certainly not a fresh boom, but it is a steady return to normality. The current wave of demand is partly driven by Asia-Pacific financial firms, like Bank of China, Daiwa Securities, Bank of Tokyo, Mitsubishi, Macquarie Group and Nomura. I see the City as benefiting from its status as a hub in the system of global trade.”

Of course, there may be an element of self-fulfilment in such research and opinion. Still, a base line reaching back to 1989 cannot be a bad starting point for a revival and one thing is certainly not pie-in-the-sky. Nomura, the Japanese bank, has agreed the largest rental deal this year, moving into the new Watermark Place on the banks of the Thames.

Come on banks and the rest of you. Sock it back to them!