Are rising office rents a sign that the recession has ended? This time last year, London was awash with available space at attractive rates. Few people wanted to move or commit to long-term leases and landlords were doing whatever they could to attract new tenants. But, the trend didn't last long. By the end of 2009, rents were beginning to rise again. In fact, before 2010 was even ushered in, rented office space had increased to nearly 4 million square feet - a 26% rise over 2008. Now, we are continuing to see rents rising as availability declines.
As an idea of what the rest of 2010 will look like, it is predicted that the rental cost for a new, grade "A", office-to-let space will rise by 13%. That puts traditionally-leased space at around £50 per square foot by the end of the year. In addition, it is predicted that leasing contracts will be longer and there will be fewer rent-free periods offered to go with them. For us, this means that, for the new or struggling business owner, short-term managed and serviced office options are more important than ever.
With recession officially ended and prices beginning to rise, establishing or moving office may feel like it's getting out of reach fast. But, by considering short-term office solutions as an alternative to long leases with heavy rents, you can continue to grow your business without worrying about a future of red. And that, in times like this, could be your saving grace.
