The gap between London’s West End and City office markets has nearly doubled and may lead to departures from the West End, reports CB Richard Ellis today.
In its ‘City and West End Differentials’ report it said that the soaring cost of renting space in St James and Mayfair over the last three years had left those markets twice as expensive as renting in the City.
‘Top prime City rents are approximately half top prime West End rents,’ it said. ‘The largest ever difference between the two markets.
‘There are increasing expectations that tenants will start to move out of the West End market raising questions about the sustainability of the market’s rents.’
The lack of supply available in Mayfair and St James, caused by Westminster’s conservative planning regime and the area’s 11,000 listed buildings, is one reason for the spiralling rents.
The report also said the prime rents were being achieved in a limited number of deals around Mayfair and St James where some tenants are willing to pay large amounts in order to meet their specific location needs.
By comparison in the City the majority of the deals done in the city were at the prime rental values.
The report concludes that the difference between the markets could widen still further and said that many tenants in the West End would still not consider moving to the City despite the significant rental savings because of the cultural difference between the markets.