Offices in Central London

Office space in Central London has always been popular with big-city investors. Since the office space market dip which occurred during the global financial crisis, office space in Central London has fast become a hot commodity, with the market growing exponentially in recent years. 2013 was the strongest year for office rental in London City in many years, with investments in office space reaching figures above £12 billion. The majority of these investors were non-domestic: 91% of investors in London office space in 2013 were foreign. However, one third of the top investors of 2013 - those spending over £100 million - were found to be UK based companies.

Popularity of office space rental in Central London has increased monumentally since 2010: Savills Real Estate Agency lists a rise of 45% in office space rental in 2013 compared to previous years. This is undoubtedly at least partly due to the rise in business confidence, with industries such as technology, medical and telecommunications (TMT) growing and demanding high levels of office space. Many companies in this sector - such as amazon.co.uk - have increased their investment in Central London office space from 8% of the overall office space take-up in 2006 to a massive 27% of take-up in 2013. Whether this phase of economic growth will sustain office space demand is a question which must be asked as investment in office properties in Central London increases. However, according to Oxford Economics, there are roughly 82,000 new office-based jobs in Central London forecast for the next five years: a number which should sustain office space take-up levels. TMT is one of the most active sectors in the fringes of Central London, with offices primarily in Midtown, West End and South Bank, while the core of London City is mostly comprised of investors of the fields of insurance and international law firms.

Many areas at the fringe of London's West End saw increased levels of investment and property transactions in 2013. Addresses included in these submarkets included some of the more popular addresses in the West End, such as Hammersmith, Victoria Station and King's Cross: Google's pre-sale of 800,000 square feet in King's Cross had a huge impact on the increased levels of investment transactions in 2013, which improved by 13% compared to 2012. Central London encompasses a number of intensely exclusive and expensive addresses, including those found in Hyde Park, Westfield, Mayfair and Bloomsbury Street. Many of those office buildings in places such as Hyde Park are historic buildings with rich histories, beautiful décor and superior architecture. The most expensive rents found in Central London are undoubtedly those in the West End: particularly, according to Carter Jonas, those in Mayfair/St. James', such as St. James' Square and Berkeley Square. Prices in these areas for new or 'comprehensively' refurbished office space cost between £97.50 and £120 per square foot (figures taken from October 2013). The highest recorded rental price in 2013 was £120 per square foot in Devonshire House. Compared to £60 per square foot in the same area in 2009, it can be clearly seen that the decline in office markets has ended, with the London office space market having firmly entered a phase of growth.

The historically low levels of office-space vacancies in Central London appearing in the past year point towards an under-supply of Grade A office space. This is an issue which appears to be likely to persist for months - possibly years - to come and therefore the market for this kind of office space will continue to be in high demand. Vacancy levels in Central London decreased to 6% by the end of 2013.

Those companies which find themselves to be cost sensitive (for example, recruitment companies and media businesses) have migrated to lower-cost sectors of London, such as Shoreditch and Farringdon as rents and business rates increased in their more traditional business locations such as Mayfair and Marylebone since Q2 of 2010.