London’s commercial property market experiences increase in demand

Posted by: Victor Pardis on 14th April 2014

London’s commercial property market experiences increase in demand

Businesses looking to secure office space in London are being encouraged to act fast, with multiple sources confirming that the city’s commercial property market is experiencing an increase in demand, at a time where supply is minimal.

Prime office space in London is being snapped up quickly. Businesses looking to secure offices in prestigious areas such as the West End will face record high rental prices.

Image source: http://farm4.staticflickr.com/3507/3936698873_b9b2e89a7f_o.jpg

The lack of available office space in prime locations has sparked competition amongst occupiers. Those without office space are currently facing limited options, with many having to resort to pre-let agreements or renting space in less popular London boroughs.

An increase in pre-lets

Given the shortage of available space in London’s prime locations like the West End, it is thought that many businesses will be considering pre-let agreements as a way of meeting their future real estate needs. A pre-letting agreement is made between a potential tenant and a developer to lease a building before its construction has even commenced. Businesses only really resort to this option when they have exhausted their search for available offices in their desired area or if they require a bespoke building, tailor-made to their business requirements.

Re-gearing of leases

It is also thought that many existing occupiers of London properties will be looking to re-gear their leases in order to remain operating from the property in the future. However due to increases in rental prices, businesses will struggle to negotiate any rental discounts or value from their landlords.

Exploring other areas of the city

A consideration for businesses is to explore other areas of the city. Although the West End is deemed the prime location for business, there are plenty of upcoming areas surrounding central London including King’s Cross, Southbank and Shoreditch. Other new districts that are emerging as potential business hot spots include Battersea, Royal Docks and Silvertown.

Serviced offices and virtual offices

The other option for businesses would be to pursue the alternative route of a serviced office agreement or virtual office contract. A serviced office is paid for on a monthly basis and includes everything from room rental to reception services, maintenance and furnishings. It is a flexible option for businesses that may not have the budget to secure an on-going lease or are unsure of their real estate needs. Many serviced offices are based in central London, allowing businesses to benefit from the status the prime location gives them, whilst only paying a fraction of the rental cost to operate from the area.

At a time where demand for London office space in london is high, many businesses may want to consider setting up elsewhere in order to avoid the high rental costs. An option would be to set up in a cheaper rental area, whilst outsourcing mail forwarding to a virtual office based in central London. By using their mail forwarding services, a business would be able to take on the central London address as their own, benefiting from its high profile status and brand enhancement.

Future proofing your business

If you are considering leasing an office in London or have plans to move premises, it is strongly recommended that you secure your deals within good time, to ensure you do not lose out to your competitors. In a market like this, businesses need to take the time to plan ahead and consider their future real estate requirements.

Image credits: goforchris