Prime Office Rents
in London Set to Rise:
Embracing a Positive Outlook
Prime Office Rents in London Set to Rise: Embracing a Positive Outlook
London’s prime commercial office market is gearing up for summer of rental growth. The latest research from the Royal Institution of Chartered Surveyors (RICS) paints a promising picture, with a +38% net balance of respondents predicting an upward trajectory for prime office rents in the year ahead. This optimistic forecast highlights the unwavering demand for top-tier office spaces and reinforces London’s status as a thriving global business hub.
Looking back at the Q1 2023 outlook, the market was subdued yet strong, with an increasing number of respondents expressing a belief that economic conditions were stabilising or even showing signs of improvement, which is a promising sign for the rest of the year.
London’s prime office sector is poised for substantial rental gains in Q2 and Q3, with a net balance of +29% anticipated. This surge in rent is driven by an increasing number of businesses realising the significant advantages that come with occupying top-notch, cutting-edge spaces. The Unica Capital REIT Portfolio has benefited from this demand and is positioned to offer high returns for long-term real estate investments, with a portfolio made up of quality rental spaces in sought after locations.
Increasingly the allure of modern, environmentally conscious buildings with superior amenities has captured the attention of forward-thinking companies seeking to attract and retain top talent.
Deloitte’s Crane Survey confirms this trend, reporting that a record number of office refurbishment projects covering 3.2 million square feet are currently underway in the city. This surge in activity is driven by landlords racing to achieve Energy Performance Certificate (EPC) B ratings by 2030. Unica Capital leads the way in this prime office space sector with a portfolio that is tailored to meet the evolving needs of modern businesses. Our properties not only embody excellence but also boast exceptional environmental credentials that align seamlessly with the sustainability goals of forward-thinking organisations. With a strong commitment to energy efficiency, Unica Capital offers an outstanding selection of office spaces that require no additional investments to meet government targets—a remarkable achievement in a market where a mere 20% of London’s offices currently meet these stringent standards.
Industry leaders, including Helical and GPE, echo the need for sustainable development in prime commercial office space. Helical’s CEO, Gerald Kaye, emphasises the strong tenant demand for sustainably designed buildings with top-quality amenities, leading to rising rental values. GPE shares this confidence in London’s tenant demand and has increased its rental growth guidance for prime offices to 3-6%. CEO Toby Courtauld highlights the growing divergence between the financial investment prospects of premium office spaces and the rest, particularly in the highly sought-after West End, where sustainable and well-designed spaces are scarce.
The increasing demand for prime office spaces in London is driven by a variety of factors. Businesses, both large and small, are embracing the concept of hybrid working, leading to a healthy mix of tenants with requirements to downsize. Simultaneously, prominent organisations are opting to leave their outdated headquarters behind, seeking refuge in modern, environmentally conscious buildings that project a strong commitment to sustainability.
Unica Capital’s team of Property Investment specialists possess an unparalleled ability to identify, finance, and manage these real estate opportunities. With their expertise and strategic insights, they ensure that our clients’ investment needs are not only met but exceeded. Our track record speaks for itself, as we consistently deliver exceptional investment vehicles tailored to our clients’ exacting requirements.
Investors, too, are eagerly embracing the positive outlook for prime office rents in London. Despite a brief period of caution, the latest figures indicate a renewed confidence, with a net balance of -14% for investor demand in Q1—an improvement from the previous quarter. This reaffirms the resilient nature of London’s commercial market and the vast potential it holds for astute investors seeking promising opportunities.
Unica is at the forefront of London’s transformative real estate investment landscape, driving the surge in prime office rents. With our unwavering commitment to excellence and our portfolio of energy-efficient, state-of-the-art spaces, we are shaping the future of the city’s office market. As prime office rents increase, Unica Capital and our investors play a pivotal role in the city’s growth and prosperity. London’s skyline is set to reach new heights, and Unica Capital is leading the way.
Published: June 13 2023
Author: Ricardo Gato