Growth in prime London rents slowing downOctober 16th, 2012 Category: Building Management
The rate of rental growth in London's prime commercial property market is starting to slow down, a new report has revealed.
According to figures from Knight Frank, prime rents in the UK capital are currently 25.7 per cent higher than they were when the recession when was at its peak in 2009.
However, the organisation noted that the rate at which they are going up has begun to level off in the last few months.
Jemma Scott, head of corporate services at Knight Frank, commented: "London's current weakness in headline rents is not due to a wider downturn in demand from tenants.
"Instead, affordability constraints and the weaker performance of London's economy are limiting the scope for rental growth."
But with Knight Frank insisting commercial property in prime locations is still in high demand, it looks as if the city is still weathering the economic storm better than most other places.
As a result, there should continue to be plenty of firms looking to outsource cleaning and other building management tasks in the area over the next few months and years.
Ms Scott noted that lettings volumes in London were particularly strong between April and June 2012.
This, she said, was because the Olympic Games led to some corporate tenants opting to come early so they can snap up the very best commercial property space.
She added that business space in London is attracting lots of attention from foreign tenants at the moment, with interest from France and the US proving to be "particularly strong" right now.
Knight Frank added that during the 12 months to June 2012, prime rents in Europe went up by 0.5 per cent. This was below the global average of 2.3 per cent that was recorded throughout the same period.
This means the group's index is now 12 per cent higher than it had been during the worst of the recession three years ago.