The first phase of Elizabeth Line, which opens this month, will trigger a knock-on effect on office rents along the eastern section of the new route
The first trains on the eastern segment of the Elizabeth Line are due to start rolling this month. While the effects of the line have already been felt in the residential market, boosting house prices along the route, office rents and occupancy costs have remained comparatively stable to date.
This is likely to change, as the improved connectivity boosts some of the less sought-after office locations along the route – especially in places such as Brentwood and Romford, where journey times are expected to be substantially reduced.
As total occupancy costs in many Central London locations are due to increase significantly following the 2017 rating revaluation, business occupiers not tied to the West End or City would be well-advised to consider relocating to more cost-effective premises in outlying, but well-connected, locations.
The total costs for good quality office space in the West End has now soared to an estimated £173 per sq. ft. and, while property overheads in the City market are 36% lower, they still come in at a staggering £110 per sq. ft. Stratford, now considered a viable alternative to the City and Docklands markets, can provide good quality office space for 59% less than the West End and 36% cheaper than the City.
These locations are 15 minutes and seven minutes away on the new rail link respectively. Stratford also has the benefit of tube links to both locations, alongside its already excellent rail connections, including Mainline, Overground, Highspeed 1 and DLR links Offic
The Elizabeth Line will also serve Canary Wharf, where combined office occupancy costs are currently £78 per sq. ft. Alternative locations, such as Custom House and the Royal Docks, will still offer a discount to the traditional Docklands market, with occupancy costs standing at circa £66 per sq. ft.
Compared to more established office locations, the Royal Docks still scores very highly, not least because of the ability to buy freehold at ABP’s Royal Albert Dock development – a rarity in today’s stock-starved marketplace.
Move further along the eastern link and the cost savings become even greater, with both Romford and Brentwood showing an approximate 75% discount on the West End, whilst being 60% cheaper than the City.
Time is clearly critical in any business location decision and the Elizabeth Line will be a game changer in widening the choice for businesses seeking to relocate from the traditional core office locations in the West End and the City.
John Bell, Managing Partner and Head of Business Space Agency