Commonwealth _ BNP Paribas Real Estate has made a bold prediction that super prime office rents in London’s prestigious West End district could surge to an astounding £300 per square foot by December 2024. This optimistic forecast is underpinned by the firm’s assessment of the current market dynamics, where demand consistently surpasses the limited availability of office space. The prediction has been fueled by insights shared by an expert at BNP Paribas Real Estate. Simon Knights, a West End office agent at the firm, believes that leasing activity in the super prime office segment could drive rents to record levels. Knights stated, “You don’t need a crystal ball to see where the super prime West End office market is headed.” He pointed out that previous forecasts made by the firm were often met with skepticism, but the market has consistently demonstrated remarkable resilience.
The driving forces behind this remarkable surge in office rents are multifaceted. Firstly, leasing events and the expansion plans of businesses have played a crucial role in shaping the market. Moreover, the competition for top talent has emphasized the importance of prime office locations. Banking and finance occupiers, in particular, have been pivotal in steering the market’s direction. Their increased activity has led to a significant expansion in the size of office spaces they require. This surge in demand, driven by a relentless pursuit of space in a competitive market, has pushed discussions around super prime office rents to new heights. Knights’ prediction is grounded in this surging demand and the ongoing transformation in how businesses perceive office spaces. Occupiers are now less concerned with physical occupancy and more focused on factors like location, talent attraction, status, and growth opportunities. The data reveals that West End office take-up increased from 520,000 square feet in Q2 2023 to an impressive 746,000 square feet. This surge in demand reflects the desirability of the West End as a prime office location.
The vacancy rate in the West End stood at just below 6.0 percent, indicating the limited availability of office space in this coveted district. In these prestigious areas, the Grade A vacancy rate is around 3.0 percent, showcasing the high demand for top-quality office spaces. This sector continues to be the most active in the West End office market, accounting for a significant 32.6 percent share of office take-up in 20 deals, totaling over 243,000 square feet. This represents a remarkable quarter-on-quarter increase of nearly two-thirds (66.5 percent), underscoring the sustained demand. Prime office rents in the West End are currently at £150 per square foot, reflecting a year-on-year increase of 7.1 percent. The market has seen rents surpassing £150 per square foot in super prime locations, such as 65 Davies Street (£185 per square foot), 38 Berkeley Square (£180 per square foot), Berkeley Square’s Landsdowne House (£175 per square foot), and 75 Grosvenor Street (£170 per square foot).
BNP Paribas Real Estate’s optimistic forecast for super prime office rents reaching £300 per square foot by December 2024 is rooted in the strong market dynamics, where demand consistently outstrips available space. The West End’s desirability as a prime office location, coupled with the growing importance of location, talent attraction, and status, is expected to drive this surge in rents. The data from Q3 2023 supports these predictions, highlighting the robust demand and low vacancy rates in the West End office market.
