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  • The Cost of Office Space in London 2019/20

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  • The threat of a no-deal Brexit is stronger than ever and yet the UK commercial real estate market still offers some security by remaining healthy.

    The economy has endured this market uncertainty since the extension of Article 50, however, the further delay on the deadline will prolong this period of equivocation and deter further business investment.

    The high-demand for both flexible and Grade A office space is continuing to tempt investors to the London market, but how long can this last in the wake of Brexit?

  • The cost of office space in London in 2019

    BoroughGrade A RentGrade B Rent
    Knightsbridge£80 - £95£60 - £75
    Hammersmith & White City£45 - £55£35 - £45
    Victoria£72.50 - £77.50£57.50 - £62.50
    Paddington£70 - £75£55 - £65
    Chiswick£45 - £55£35 - £45
    St. James’s & Mayfair£105 - £120£67.50 - £82.50
    Covent Garden£65 - £82.50£50 - £65
    Soho£80 - £97.50£60 - £72.50
    North Oxford Street (East & West)£75 - £85£60 - £70
    Midtown£65 - £82.50£50 - £67.50
    Holborn & Bloomsbury£62.50 - £70£62.50 - £65
    London Bridge & Southbank£65 - £72.50£50 - £55
    City£70 - £82.50£67.50 - £75
    King’s Cross & Euston£65 - £77.50£50 - £67.50
    Clerkenwell & Farringdon£70 - £80£55 - £65 ↑
    Shoreditch & Old Street£65 - £75£50 - £57.50 ↑
    Whitechapel & Aldgate£50 - £60£35 - £45 ↑
    Hackney & London Fields£35 - £42.50£25 - £32.50
    Stratford£40 - £45£30 - £35
    Canary Wharf£40 - £45£35 - £40
    Battersea & Nine Elms£25 - £32.50£20 - £27.50
    Camden & Kentish Town£45 - £65£40 - £50
  • Grade A Shortage

    Although construction levels have risen this year, the supply pipeline remains extremely constrained. This is due to oversubscribed pre-letting activity which constricts the availability of Grade A space – before it is even completed.

    The surge in demand for Grade A office space has led London’s downtown properties to reach maximum occupancy.

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  • Over the past year, take-up of high-quality office space has increased beyond supply levels, leading landlords to raise rent rates on remaining properties.

    In 2020, the decrease in vacancy levels will force businesses to consider other options for renting. Due to a lack of new entrants into the London market, it is unlikely that there will be any further growth of Grade A space in the near future.

  • Flexible Space

    In 2019 the demand for more flexible work environments is at an all-time high, with plug and play workplaces offering an alternative to fixed office space. Whilst there may be a reduction in Grade A office space the flexible workplace is set to flourish, with more landlords realising the potential of base leasing. Corporations are launching their own flexible product both in and outside the UK.

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  • Flexible office space is on the rise, with more space taken up in the top regional cities in the first half of 2019 than in the whole of 2018. Although there has been a lower acquisition rate by flexible office providers in the beginning of 2019, a surge is expected to take place in the second half of the year.

  • Investment

    With so much uncertainty surrounding the market in the shadow of Brexit, why do investors continue to choose London?

    Comparatively, London comes out on top in terms of stability, liquidity and transparency and there is potential for gradual rent growth. Furthermore, the pound has been shifting in value as a result of Article 50, providing an additional advantage for investors looking to save and therefore, leading to many revisiting the London market to seek new opportunities.

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  • In spite of the political unrest facing the UK, the central London property market is holding its strength. The impending impact of Brexit does not look as bleak as it did in 2016, and there is reason to remain positive that the resilience of the market will endure.

    Whilst there is no significant development in the cost of London office space there is much on the horizon that could unbalance this stability. It is important to remember that the cost of office space will likely fluctuate again in 2019 once the developments in transport for London are complete. Both the Elizabeth line and the HS2 are set to increase the value of property in central London as commute times are halved in support of suburban living.

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