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Central London office prices and rents are slipping due to Brexit concerns

Office rents and values have begun to slip across the central London commercial property market with some firms nervous about Brexit, a new report suggests.

Many locations have seen headline office rents hold steady for the better part of two years. However, rent free periods have been increasing in order to sustain this, according to the latest London office bulleting from Cluttons.

According to Cluttons’ head of research, Faisal Durrani, it is a well-documented fact that net effective rents have been declining ever since the Brexit referendum last summer. “We’re now at a critical point in the market, where a combination of subdued demand and lease incentives at extraordinary levels mean that headline rents have started to give way,” he added.

Cluttons cites the intensification of uncertainty around the outcome of the Brexit talks and the UK seemingly missing out on the rising level of global trade as the chief reasons behind the deterioration in rents.

While rents have edged lower in some locations, implied capital values have also followed suit in these areas, according to Cluttons, although in real terms the declines are marginal at best, with locations such as Canary Wharf and the City Core down £15 per square foot, softening slightly in the third quarter of 2017.

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