CITY office rents have recorded the biggest quarterly increase since 1988, in a sign that the Square Mile property market is clambering back to its feet.
Rents shot up by 12 per cent in the first three months of 2010 from £42.50 per square foot to £47.50, according to a survey by NB Real Estate.
James Gillett, Director of City offices at NB Real Estate: “This is a phenomenal recovery in rents in such a short space of time. It is not normal to see rents jump so dramatically but there has been little that has been normal about the commercial property market or the City of London over the last two years.”
“Landlords and the financial institutions across the City and Docklands are far more optimistic than they have been in years,” he continued.
But rents are still way below their peak of £69.50 per square foot in the thrid quarter 2007. Office rents across London have tumbled since the end of 2007 and hit a floor in the fourth quarter of 2009 before rocketing in the first quarter of 2010, the survey added.
A total of 1.2m square foot of space was let in the City of London in the first quarter of the year – six times more than the 202,000 square foot in the first quarter of 2009.
The recovery of rents in the Docklands market has been even more dramatic with average achievable rents on Grade A office space increasing by 25 per cent from £30 per square foot to £37.50.
Gillett said: “The Docklands office market is a far less liquid market than the City of London market so it doesn’t take too many deals to push average rents one way or another. This amazing recovery has to be seen in the context of dramatic fall.”