Prime office rents in London’s West End continue to rise in response to growing demand

BNP Paribas Real Estate has predicted that super prime office rents in London’s West End could hit £300 per sq ft by December 2024, as it says demand continues to outstrip the constrained supply of space. The prediction has been made on the basis of evidence shared by an expert at the firm. BNP Paribas Real Estate West End office agent Simon Knights claims that lettings could see rents for super prime office stock reach highs of “up to £300 per square foot by December 2024” as demand continues to outstrip constrained supply.

He commented: “You don’t need a crystal ball to see where the super prime West End office market is headed. We predicted last year that leasing events, business growth plans, and the importance of employing talent would drive the market and all the cynics accused us of being terrifyingly optimistic, and look, we’ve seen rents of over £200 per square foot regularly discussed on prime buildings.

“Banking and finance occupiers in particular continue to steer the direction of the market. This activity has seen footprints rocketing in size and discussions around super prime rents move to new heights as the grapple for space becomes increasingly more heated and competitive. My prediction, based upon this activity, is that we could see rents reach highs of up to £300 per square foot by December 2024 as this demand continues to prove the naysayers wrong that believed the end is nigh for the office sector. These occupiers seeking out these new premises are less concerned by physical occupancy and are more much enlivened by location, talent, status and growth.”

The firm says that the statement is evidenced by the latest Q3 2023 data:

• West End take-up climbed from 520,000 sq ft in Q2 2023 to 746,000 sq ft, whilst the vacancy rate stood at just below 6.0 percent.
• In Mayfair and St James’s, the Grade A vacancy rate stands at around 3.0 percent
• Banking & Finance remained the most active office sector, accounting for a 32.6 percent share of take-up across 20 deals equating to over 243,000 sq ft, representing a quarter-on-quarter increase of almost two-thirds (66.5 percent) in the West End
• Prime West End rents stand at £150 per square foot (up 7.1 percent year-on-year)

Rents have been achieved in excess of £150 per square foot at the super prime end of the market across buildings like 65 Davies Street, W1 (£185psf); 38 Berkeley Square, W1J (£180psf); Berkeley Square’s Landsdowne House, W1J (£175psf); and 75 Grosvenor Street, W1K (£170psf).