Why "ego appeal" has made office space in London's skyscrapers the fourth-most expensive in the world

 
Emma Haslett
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A square foot of space in skyscrapers like The Shard costs $2,400 (Source: Getty)

If you want to rent an office in one of the City's trendy skyscrapers, it's going to cost you. At an average of $2,400 (£1,467) per sq ft, London's high-rise office space is the fourth-most expensive in the world, according to a report published today - just behind Hong Kong, Tokyo and Manhattan.

According to Knight Frank's Global Cities report, businesses pay a whopping $6,330 for a square foot of space in Hong Kong's skyscrapers, dropping almost a third to $4,180 in Tokyo and $2,980 in Manhattan. Chicago, on the other hand, is a bargain, costing just $960 per sq ft.

The report suggested that the "ego appeal" of being on the upper floors of skyscrapers, "with the panoramic views", means the top floors can command a 15-20 per cent premium over other rents.

London is the highest ranked European city, with capital values on upper floors more than double those in Paris or Frankfurt.

Upcoming (literally) skyscrapers in London include the 40-storey 100 Bishopsgate, which will provide another 900,000 sq ft of office, retail and restaurant space, and the 60-storey City Tower in Vauxhall, which will include a neighbouring 45-storey residential block.

The report also pointed out that London's "prime" office rent is the most expensive in Europe, costing an average of $174 per sq ft per year to rent. If you're in the market to buy office space, $100 will get a mere 21,593 sq ft - almost half Paris' 42,072 sq ft.

But growth in the cost of office space is likely to slow down, predicts the report. In the next five years, the cost of London's office rents will increase by 16.3 per cent, way behind San Francisco's 36.2 per cent, Madrid's 28.7 per cent and New York's 28.2 per cent. Singapore, Sydney and even Washington, DC are ahead of London.

As if we didn't know already, the "upcoming" districts in London are Shoreditch and the "northern City fringe", ie. the area between Farringdon and Old Street. However, the area's growth has not been without issue. While many welcome the investment the area has attracted, others warn of gentrification changing the essence of what attracted the initial tech businesses: vibrancy, charm and affordability. But it adds that:

The area's growth has not been without issue. While many welcome the investment the area has attracted, others warn of gentrification changing the essence of what attracted the initial tech businesses: vibrancy, charm and affordability.

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