Rents for the best-in-class office space in the West End of London could hit record levels next year as demand continues to outstrip supply in one of the company’s most popular areas.
BNP Paribas Real Estate, the property arm of the French lender, forecasts rents for super-prime stock to rise to up to £300 per sq ft by December 2024.
Simon Knights, head of West End agency at BNP Paribas Real Estate, said: “We predicted last year that leasing events, business growth plans, and the importance of employing talent would drive the market and all the cynics accused us of being terrifyingly optimistic, and look, we’ve seen rents of over £200 per sq ft regularly discussed on prime buildings.”
In the third quarter, take-up in the West End climbed to 746,000 sq ft, up from 520,000 sq ft in the second quarter, while vacancy rates stood at just below 6 per cent. In Mayfair and St James’s, the Grade A vacancy rate is about 3 per cent.
Some super-prime office spaces including 65 Davies Street and 38 Berkeley Square have fetched rents of £185 per sq ft and £180 per sq ft, respectively.
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Finance and banking companies in particular have steered the direction of the market, Knights said, with the sector accounting for a 32.6 per cent share of take-up in the third quarter. He added: “This activity has seen footprints rocketing in size and discussions around super-prime rents move to new heights as the grapple for space becomes increasingly more heated and competitive.”
Recent standout deals include Eisler Capital, a hedge fund, moving from its 12,000 sq ft office in St James’s Street to a larger 50,000 sq ft of space at Land Securities’ Lucent building, near Piccadilly Tube station.