18 March 2010
London maintains its global competitive property spot
A new report commissioned by the City of London Corporation and
undertaken by CB Richard Ellis confirms that London still has a
competitive property offer when compared to other leading
International Financial Centres. ‘The Competitiveness of
London’s Business Property Offer’, launches at the MIPIM property
conference in Cannes and reviews the current and future
competitiveness of London’s business property, making comparisons
with other international financial centres. It finds that the
City of London and Canary Wharf are the locations of choice for
large financial occupiers in the capital; rents are significantly
lower than other top office rent locations.
As competition amongst international financial centres
increases, property offers will grow in importance as an aspect of
competitiveness. City of London office rents have fallen by 54% in
real terms between the period of 1975 - 2009 which is a much more
rapid fall than other major financial centres such as Tokyo, New
York and Frankfurt.
London has a wide spectrum of office space available in
different parts of the Central London market adding to its
competitiveness. The top grade A rent in the City of London
was £43.50 per sq ft at the end of 2009, whereas the equivalent in
Mayfair and St James was £85.00 per sq ft.
It has a similar profile of availability by rent to Paris – 71% of
available units are quoting a rent of less than £40.00 per sq ft in
Central London, compared with 73% in Paris and 86% in New
York. Current office availability in Central London is nearly
on a par with New York, lower than Hong Kong and Singapore and
higher than Paris, Tokyo and Geneva.
However the aspect of London’s property offer which is most
problematic for occupiers is that supply is inelastic with
pronounced volatility in development and rental levels.
Although London has good current availability for modern large
floorplates such as a single floor of 20,000 sq ft, the report
suggests it is less responsive to meeting new demand for larger
units in the future due to strong recent demand.
Stuart Fraser, Chairman of Policy and Resources Committee, City
of London Corporation said:
“London as a truly global city offers a rich tapestry of
arts, culture, entertainment and an open society with a broad
ethnic diversity. The financial heart, the City of London
together with Canary Wharf, offer an unparalleled agglomeration of
skills and disciplines. Add to that a local authority
dedicated to maintaining London’s international competitiveness
with a business friendly approach to planning, unsurprisingly makes
it the location of choice for occupiers.”
The ability to accommodate a super-trading floor is an important
consideration for major international financial centres. Only
New York and Shanghai have current availability for a building with
floorplates of 60,000 sq ft. There were seven buildings in
New York and six buildings in Shanghai, although Shanghai benefits
from the exceptional scale of its building boom and would be able
to deliver a further six buildings within two and a half
years. Paris is the only other centre that could deliver a
building over a similar timeframe.
Peter Damesick, Head of UK Research, CB Richard Ellis said:
“Top rents in the West End often grab headlines, but there is
much greater depth and diversity elsewhere n London‘s property
offer. However, new supply is prone to long lead times.
The credit crunch curtailed development so a supply squeeze in new
space is now in prospect while construction picks up.”
Over the longer term, London has major potential supply capacity
with a large proportion in new locations. Significant
transport improvements, including Crossrail, will help unlock much
of this supply potential. As a result the market will evolve
to a polycentric structure which will enhance London’s
competitiveness in relation to its property offer and provide
occupiers with a greater choice of locations and cost levels.
Download the report
Ends
Notes for editors
About the City of London Corporation:
The City of London Corporation is a uniquely diverse organisation.
It supports and promotes the City as the world leader in
international finance and business services and provides local
services and policing for those working in, living in and visiting
the Square Mile. It also provides valued services to London and the
nation. These include the Barbican Centre and the Guildhall School
of Music & Drama; the Guildhall Library and Art Gallery and
London Metropolitan Archive; a range of education provision
(including three City Academies); five Thames bridges (including
Tower Bridge and the Millennium Bridge); the Central Criminal Court
at Old Bailey; over 10,000 acres of open spaces (including
Hampstead Heath and Epping Forest), and three wholesale food
markets. It is also London’s Port Health Authority and runs the
Animal Reception Centre at Heathrow. It works in partnership with
neighbouring boroughs on the regeneration of surrounding areas and
the City Bridge Trust, which it oversees, donates more than £15m to
charity annually.
About CB Richard Ellis Group:
CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P
500 company headquartered in Los Angeles, is the world’s largest
commercial real estate services firm (in terms of 2009
revenue). The Company has approximately 29,000 employees
(excluding affiliates), and serves real estate owners, investors
and occupiers through more than 300 offices (excluding affiliates)
worldwide. CB Richard Ellis offers strategic advice and execution
for property sales and leasing; corporate services; property,
facilities and project management; mortgage banking; appraisal and
valuation; development services; investment management; and
research and consulting. CB Richard Ellis has been named a
BusinessWeek 50 “best in class” company for three years in a row.
Please visit our website at
www.cbre.com.
Press enquiries
Kristina Blissett, Press Office, City of London
Corporation
Tel: 020 7332 3451 / Mobile: 07795 290040
Email:
kristina.blissett@cityoflondon.gov.uk