Knight Frank’s Global Cities 2018 report also found that tech occupiers in particular are targeting the Shoreditch area, where demand for office space is pushing rents higher than those in mid-market San Francisco and almost double those in Brooklyn, New York.
The report, which examines the cost and performance of office space in tech districts and in commercial buildings of more than 30 storeys, showed that London remains the European capital for skyscrapers with rents at $110/sq ft (£81.81 sq ft) for H1 2017 but it still lags behind Hong Kong ($304/sq ft), New York ($162/sq ft) and Tokyo ($140/sq ft) on a global scale.
London has also slipped behind San Francisco at $117/sq ft but remains the only European city in the top 10 overall with Paris ($58/sq ft) and Frankfurt ($54/ sq ft) the next best. Those positions are under threat by the fastest rising city, Toronto, where skyscraper average rent rose 11.9% in H1 2017 to $58/sq ft.
James Roberts, chief economist at Knight Frank, said: “That London still commands the highest skyscraper office rents in Europe, despite the Brexit uncertainty, is a statement of its resilience and popularity as a business location. However, since last year London has slipped from fourth to fifth place in this ranking, and if we keep seeing populist policies which make doing business in the UK more difficult, it is not impossible for London to slide further down the table.”
In the tech sector, London’s Shoreditch hit the top spot globally as rents reached $90.75/sq ft over the first half of the year. Hong Kong, Shanghai and Singapore all are well outside of the top spots, providing affordable office space in their emerging tech districts with office rents in Hong Kong’s Cyberport just $36.90/sq ft.
The other leading tech hubs are mid-market in San Francisco ($77/sq ft), Silicon Docks in Dublin ($76.30/sq ft), Rama 1 in Bangkok ($74.25/sq ft) and the 1st, 2nd and 9th districts in Paris ($74/sq ft).
Roberts added: “The fact that rents in Shoreditch exceed those in Brooklyn and San Francisco underlines London as a world-leader in tech. However, while there has been much debate on how Brexit will affect London’s status in financial services, the impact on the burgeoning tech sector has been overlooked. To maintain its position London will need to attract and retain the world’s best talent, and that means works visas.”