UK Property News
20 October 2011
Average rents fell across the UK office market in Q3, according to the latest PPR/CoStar figures, despite continued rises in prime rents. In the quarterly Rent Snapshot, average rents are now at £17.27 per sq ft across the UK, a 1% drop on the previous quarter and the same period last year. In the second tier office market, rents are down 2% on a yearly basis to an average of £13 per sq ft. In the prime office market however, rents are up by 2% on the same period last year and flattened to grow by 1% in the last quarter.
London’s Midtown has seen the biggest upward trend on rents in the last 12 months, with a 14% rent hike. Prime rents in the West End have also had a strong year, with a 17% rent increase to £105 per sq ft.
Regionally average rents in the East Midlands have enjoyed a 39% increase on last year, with an 18% hike in the last quarter. Guy Sheppard, real estate analyst at CoStar, said: “Although achieved rents for UK offices fell 1% in Q3, the results varied across the country. Rents for Tier 1 markets edged up by 2.4% year-on-year ; this was driven almost entirely by strong rental growth in London’s markets (average rents grew by 14% in Midtown, 8% in the West End, 4% in Docklands, and 3% in the City). “Although rare, prime rents in London remain just above the £100 per sq ft.
However, prime rents look to have peaked as, on a quarterly basis prime rents were either flat or falling in all Tier one markets. “In general secondary locations have struggled in Q3, with CoStar’s Tier 2 markets falling by 1.9% year-on-year. That said, there were some bright spots, average rents in Aberdeen are 14% higher than a year previously, whilst Cambridge has also performed well as average rents grew by 10% to £22.50.”