Hedge funds and other West End office tenants whose leases are due for renewal this year could face rises of 30% on average. Daily Telegraph.
Businesses that took office space in Mayfair and St James in 2002, when the market was down, paid an average of £25-£35/sq ft. Since then, rents have more than doubled, rising 14% in the last year alone.
Rents of offices in Grosvenor Street, Brook Street and Old Burlington Street, are now around £100/sq ft because of a lack of available space.
Tenants whose rents are due for five-yearly review or are at the end of their five-year leases face huge rent rises if they want to remain where they are. Cadbury Schweppes, which has an office in Berkeley Square, agreed to pay £68.75/sq ft in 2002. Sources say that this year its rent could become ‘a three-figure sum’.
The dramatic rent rises will continue into 2008 and 2009 as reviews come up for rents set in 2003 and 2004.