For the first time since April 2008, the rental property market sees growth in office rental values hit double figures in Central London.
High demand and limited availability saw growth rise 1.1% in October alone. Rent prices certainly aren't putting companies off. Reportedly, 3.6 million square feet of office space was bought in the third quarter of 2015 with an additional 3.8 million under offer and expected to complete before the end of 2015.
Capital values are also on the increase, with October 2015 seeing 1% growth in the London office market. With rising rents and capital value, investors are making an average total monthly return of 1.2%.
Kevin McCauley, Head of Central London Research at CBRE said:
“London’s office market has been heating up for some time now, but there is still strong business demand across the capital. Rental value growth has not been this sustained since before the financial crisis, and together with rapidly rising property values, landlords and investors are experiencing a booming market.'
It has been argued that there are not enough new developments being built to cope with this demand and that in turn London could see businesses having to look elsewhere.
Research from BNP Paribas found that at only 4.68 percent of total stock, the level of supply during the third quarter of 2015 is equivalent to less than one years’ supply at the current levels. However, it may not be all doom and gloom as the latest biannnual London crane survey from Deloitte claims that the construction of office spaces in Central London is in fact at its highest level for seven years and has risen by a fifth in the last six months alone.
Generally, the consensus is that office space is at a premium - good news for property investors, as this is likely to keep those rental values rising.