City office rents propped up in uncertain times by low supply

 
Helen Cahill
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22 Bishopsgate will be finished in 2019 (Source: Riverfilm Martin Richardson)

Rents in the City's offices are being propped up by low supply, with only three buildings set to be completed in the capital's financial quarter this year.

This year 1 Angel Court, 45 Cannon Street and the Scalpel will be finished, and Chris Vydra, City leasing agent for CBRE, said that the dearth of new office blocks means rents will stay stable.

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Insurance firms in particular will always want to be located in close proximity to Lloyd's of London, meaning the options they have available to them are limited. In addition, the lack of development land in the City has become a major constraint on the number of new blocks going up.

The lack of supply in the City helps explain why developers are still confident committing to ambitious towers such as 22 Bishopsgate despite the uncertainties surrounding Brexit, and how the upcoming negotiations between Britain and the EU will impact the UK's financial services sector.

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Vydra said that in addition to the lack of supply helping keep rents up, occupiers have also realised that the fundamentals of the UK economy have remained strong in the months following the vote. With pivotal elections looming across the continent, uncertainty has also started to loom over other European markets, making the UK seem attractive in comparison.

Last October, Axa Investment Managers confirmed 22 Bishopsgate will be going ahead. The development of the 62-storey tower had been put on hold due to the EU referendum.

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