Rents for the capital's greenest and most high end offices have climbed over the last five years, by more than a quarter for some space in the West End, and further growth is predicted in 2024 according to a new forecast.
The growth comes even with the rise of hybrid working and many companies only having staff in for a few days per week.
Property agent Carter Jonas used a mix of its own and CoStar data and found in the West End prime rents for top quality space have risen to £135 per sq ft this year from £105 per sq ft in 2018. During the same period City figures improved to £75 from £65.
Carter Jonas expects rents to edge up respectively to £140 and £77.50 per sq ft in the coming 12 months, reflecting the imbalance between supply and demand. It added that rents for “super-prime” space in Berkeley and St James’s squares are already established at £180 per sq ft.
Michael Pain, the consultancy's head of tenant representation team, said that research shows some employers realise that post-Covid to entice their workforce back into the office, and to compete in a tight labour market, "they must offer a work environment that is vibrant, attractive and environmentally friendly".
The research also showed rents for properties with an "excellent" rating in the BREEAM sustainability assessment method rose 8.4% in the five years to 2023 in the West End, and they gained 6.9% in the City.
Pain added: “Landlords of office space with poor energy performance ratings face a stark choice: invest in a refit or reconcile themselves to a long letting void, a costly rent free period and a low rent, reflecting the shift in demand towards environmentally friendly Grade A space.”
In 2023 to date firms have commenced construction on 51 office schemes in central London with no guaranteed occupier in place, according to real estate consultancy Colliers. That comes as some property developers look optimistic about future occupier demand.
