UK office rents remain stable

UK office rents remain stable




Headline office rents are holding firm across the UK following the decision to leave the European Union, according to a commercial property consultancy.

Lambert Smith Hampton’s (LSH) UK Office Market Pulse has revealed that rental levels were being supported by an ongoing shortage of good-quality stock across the markets. 

The 15 markets that recorded an increase in headline rents during the first half of 2016 saw notable rises, including 25% growth in Hemel Hempstead and 20% in Watford, while Mayfair was the only area that saw a fall. 

Last month, Bridging & Commercial found that despite fears of a downturn in the UK commercial property market, investors with ‘cool heads’ were beginning to return

Tony Fisher, national head of office agency for LSH, felt that despite uncertainty, deals, interest and headline rents had remained healthy outside of London so far.

“However, if sentiment continues to be hit, headline rental growth that would otherwise have occurred will be dampened, with the risk of incentives increasing. 

“A big plus is that supply is relatively tight, which should help to support headlines.

"In terms of central London, the supply of grey space which occupiers may bring to the market during 2017 should they consolidate as a result of Brexit is unknown and we do not expect to see rental growth here. 

“The City, Canary Wharf and Docklands are likely to see the biggest impact as they are the most exposed given their financial services focus."

Meanwhile, Charlie Lake, capital markets director at LSH, concluded: "It is encouraging to see H1 take-up maintaining momentum across the regions. 

“Investors will be eagerly watching to see if the recent strength of inquires is borne through in H2 and, elsewhere, defensive opportunities continue to attract a premium in what is quickly becoming a market with limited opportunities."

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