London remains the most expensive city for office rental

Posted by: Victor Pardis on 27th March 2014

Commercial real estate brokers, Cushman and Wakefield, created the Office Space Across the World report. In order to produce the report, which features a global ranking of the top ten most expensive office rental cities, they took into consideration both published rental rates and additional costs such as agent fees.

Hong Kong was announced as home to the most expensive office space in Asia (coming second globally). Moscow was ranked third by Cushman & Wakefield, closely followed by Beijing, which has jumped up three places since last year. Whilst Beijing is currently suffering a loss in tourism (believed to be caused by bad air pollution) this does not appear to be affecting the country’s ability to rent out office space to businesses.

So how has London gained the number one position?

It is thought that strong demand, coupled with dwindling supply, is the reason why London’s West End rental rates have risen by around five per cent. With office rental rates largely unchanged in Hong Kong over the past year, the gap between the two cities has continued to widen.

London’s global appeal continues to grow, with demand coming from businesses overseas as well as in Britain. It’s not just one particular sector pursuing the office space either, with steady demand for offices coming from all business industries.

A lack of high quality office space in London has pushed businesses towards renting in the West End, in spite of high rental prices. Whilst office space may be cheaper elsewhere, the gravitas of a business address in a premium location is very attractive to businesses wishing to raise their company profile.

Other alternatives

With West End rental prices reaching an all time high, many businesses find they have to look for other rental options that are more suited to their budgets. Other locations that have dramatically improved over the last few years include Battersea, Waterloo, Kings Cross and Shoreditch, all of which offer slightly more affordable rental rates. However if you have your heart set on the West End, you could always opt for a serviced office instead.

A serviced office comes with all of the necessary furnishings along with broadband connection, security, maintenance, reception services and utilities included in the price. Rather than leasing the whole building, you will simply pay a monthly service fee for the room and services you use. A great benefit of a serviced office is that they allow business owners to operate from prime business locations, without having to incur all of the expensive costs. Serviced offices are also extremely flexible in that you can simply set up and pack up whenever you wish to.

Another option is virtual offices. These are businesses that provide services such as call answering and mail forwarding. They are based in prime locations, such as the West End, and allow business owners to continue working from home, using the West End business address as their own. Virtual offices give businesses a London location at just a fraction of the rental cost.

Conclusion

With global office rents predicted to increase by a further three per cent overall this year, we expect to see more and more businesses exploring the alternative options provided by virtual and serviced office providers.