Croydon office rents are set to surge by 63 per cent in the next two years, new research shows, as the south London borough undergoes a revival and new schemes come onto the market.
According to Savills, rents will rise from £24.50 per sq ft to £40 per sq ft (£430 per sq m), putting Croydon on course for the highest rental increase of any mature property market in the UK.
Take-up figures for 2015 to date have already surpassed last year's levels at 185,000 sq ft compared with 176,000 sq ft in 2014 – a marked increase on the 10-year average of 108,000 sq ft, Savills said.
However despite this surge in rents, prices are still significantly below those in the City and the West End. At the Interchange, for example, an eight storey office scheme launched by property firm Canmoor last year, rents are up to 78 per cent less than similar space in the West End.
Andrew Willcock, director in the south east office agency team at Savills, said: “Croydon has seen strong take-up in the last 24 months which continues to push Grade A office rents up. Despite this, occupier costs are still significantly less than those in central London, and therefore this, and the healthy development pipeline, suggests interest is only set to increase.”
Investors and developers have flocked into Croydon over the last five years as part of a wider £5bn regeneration of the area, which was badly hit by the 2011 riots and previously suffered from years of under investment.
Hammerson and Westfield’s £1bn shopping centre development, which will see Centrale and the tired sixties Whitgift Centre given a complete makeover, is key to its revival, bringing 5,000 new jobs and 600 homes, a cinema and other leisure outlets.
Renaissance, the first speculative office in Croydon for around 20 years, was completed in November 2013 by Mark Glatman’s Abstract Securities and has been pre-let to firms including Parabis Law and the Board of the Pension Protection Fund.
Meanwhile Stanhope and Schroders have started work on a £500m business, residential and leisure quarter at Ruskin Square next to East Croydon Station.
Croydon has also been quietly trying to position itself as "the Silicon Valley of South London" with its own Tech City initiative, attracting start-ups in search of better value rents and good transport connections.
According to recent figures from the Office of National Statistics, the borough achieved 38 per cent growth of new tech and media businesses since 2011, and Croydon is now home to over a thousand digital, creative and technical startups.
Last month Martha Lane Fox’s UK digital skills charity Go ON UK picked Croydon as the base for a 12 month pilot project to help residents and businesses boost their basic digital skills.