The much anticipated arrival of Crossrail has driven huge office rental growth in London submarkets, which have outperformed traditional hubs like the West End and The City of London.
It comes after 24 May 2022 was confirmed as the official launch date for Crossrail.
New data reveals that prime rents in Shoreditch and Clerkenwell during this period have risen by 123 per cent and rents in Paddington have grown by 45 per cent, whereas the City has seen increases of 21 per cent and the West End only 2 per cent..
Underlining the importance of connectivity, prime rents in Southbank and King’s Cross have also outperformed, rising by 66 per cent and 55 per cent, respectively, largely due to their proximity to a major transport hub and the quality of new stock delivered into these markets.
Real estate services firm Cushman & Wakefield tracked the annual rental growth in different office markets across Central London between 2008, when Crossrail was first announced, to the present day.
Historically, London’s best performing submarkets have been the ‘City Core’, focused around the EC2 and EC3 postcodes, and the ‘West End Core’ comprising Mayfair and St James’s.
However, anticipation of Crossrail’s arrival had a material effect on London’s office occupier market almost immediately after receiving Royal Assent in 2008.
Ben Cullen, Head of Offices at Cushman & Wakefield, told City A.M. this morning that “the long-awaited opening of the Elizabeth Line will provide further impetus for rental outperformance in areas like Shoreditch and Clerkenwell, which have been the real Crossrail winners.”
He added: “The endorsement of Shoreditch and Clerkenwell largely originates from the growing tech sector around Old Street Roundabout. With the diversity of amenities in the area, they have attracted occupiers from both the City and the West End, while the quality of stock being delivered has sustained the areas’ growth.”
“We have seen a clear flight to quality in the office occupier market, which goes beyond the quality of the building; it incorporates the quality of the local area, including places to socialise and, crucially, transport.”
Cullen pointed out that, even after the Global Financial Crisis, those London submarkets surrounding new Crossrail stations saw the quickest recovery in rental levels; by 2012, prime headline rents in six of London’s submarkets had recovered to their pre-2009 levels.
“Five of these markets were served by future Crossrail stations,” he stressed.