Square Mile to lead rise in office rents

Global real estate adviser DTZ yesterday said rents in the City would rise by eight per cent in 2010 &ndash; faster than previously expected.<br /><br />And DTZ said that London would lead the rest of Europe out of the property slump, due to a lack of supply in the capital.&nbsp; <br /><br />It upgraded its forecasts after the volume of leasing transactions jumped by 60 per cent in the third quarter,&nbsp; with availability falling by five per cent.<br /><br />The jump in City rental values follows a period of sharp decline, after the financial crisis took its toll. <br /><br />Head of UK research Martin Davis said: &ldquo;London rents fell sharply in 2008-09, while occupier markets elsewhere in Europe have been slower to adjust. <br /><br />&ldquo;And now, with yields starting to move in, and occupier markets showing early signs of recovery, London once again seems to be leading the way.&rdquo;<br /><br />But rents in the rest of Europe are expected to fall, or stabilise at best, in 2010.&nbsp; European rents are predicted to fall by another 13.4 per cent by the end of 2009.<br /><br />DTZ said that the cost of prime office space in Rome, Munich and Luxembourg will also fall in 2010. <br /><br />The group says Rome will suffer a 5.4 per cent dip, with Munich and Rome both facing a three per cent fall in rents over the course of 2010. <br /><br />This is because they have lagged behind the rest of the commercial property sector in the slump, so will recover later.<br /><br /><strong>FAST FACTS </strong> CITY RENTAL DECLINES<br />&9679; DTZ yesterday forecast City rents to rise by eight per cent in 2010, leading the rest of Europe out of the property slump<br /><br />&9679; DTZpredicts European rents to fall by 13.4 per cent by the end of this year.