Status symbol skyscrapers boost London’s office space rents | 29 September 2014
A new report has found that London is the most expensive city in Europe to rent office space, due to the prestige associated with occupying skyscrapers.
Estate agent Knight Frank’s latest Global Cities report examined the cost per square foot of commercial property. It discovered that London’s average rent stands at £1,467 per square foot ($2,400) in a lofty skyscraper, or £107 ($174) for prime office space – significantly higher than in Paris or Frankfurt.
The research revealed that prices were being skewed by the ‘ego appeal’ rents demanded in London’s trendy skyscrapers, such as The Shard, cityam.com writes. It suggested that being based on the upper floors of such towers, with the panoramic views, can add some 15-20 per cent on top of other prime London office rents. The price per square foot in these upper floors was found to be more than double those in Paris or Frankfurt.
Take-up in skyscrapers was traditionally the preserve of financial business, although many other industries have muscled in over recent years. Software solutions firm Salesforce is one of many tech firms which have moved into London’s tall offices, knightfrank.com says, as well as an influx of insurance companies.
In fact, London is now the fourth most expensive city in the world for renting office space, outranking San Francisco, Singapore, Sydney, Shanghai, Beijing and Los Angeles. Although there are plenty more towers currently in construction, such as City Tower in Vauxhall and 100 Bishopsgate, rents are predicted to stabilise over the next five years, Knight Frank predicts.
The most expensive cities in which to rent office space were Hong Kong, Tokyo and Manhattan, costing $6,330, $4,180 and $2,980 respectively.
Speaking about the report, James Roberts, head of commercial research at Knight Frank said: “Skyscrapers are the Lamborghinis of the office world, as investors pay more to own these prestige and high quality buildings.
“Upper floors in skyscrapers command higher rents compared to office space in low rise buildings, due to the ego appeal of having an office that towers over competitors. Also, the panoramic views are a strong marketing tool, as a client can be taken into a meeting room offering an aeroplane perspective on the city below. Thus, the premium rents on offer justify the high prices investors will pay to own such a property.”
The views expressed in this post are those of the author and are not necessarily those of Qube Global Software. All facts are verified where possible directly by the author.
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