London is set to face the worst shortage of Grade A office space in over two decades, according to a new report. The report, which has been released by the real estate division of Capita Symonds, estimates that the commercial property sector is going to see a shortage of Grade A office space the likes of which has not been experienced since the 1980s. A lack of both prime stock and new developments are being blamed for the expected shortfall, with rents in existing offices in London likely to skyrocket over the course of the next couple of years.
By 2013, Capita Symonds believes that the rent for office space in the West End of London will have reached about 100 pounds per square foot, while also anticipating that rents will reach 65 pounds per square foot in the city. Currently, rent for office space is 70 and 50 pounds in the West End and the city respectively, with rent having already been raised a considerable amount over the course of the last 12 months.
"Two years ago this situation would have been unthinkable," says the director of the real estate division of Capita Symonds, James Gillett. "Companies were in a great position with a surplus of good space resulting in aggressive financial offers from landlords desperate not to lose tenants. For businesses looking to move, those days have passed - the boot is firmly on the other foot. Consequently, occupiers need to consider their options very carefully."
