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Our View

Prime office rents increased by 3.5% on average over the 12 months to the end of Q1 2022, although this growth has been driven by a limited number of locations, with the majority of markets in the Eastern M25 seeing rents remain stable.  Attention has been largely focused on major office locations outside the M25, with occupiers reviewing their strategies towards their presence outside of the capital.  It will be interesting to see if the next 12 months produces an increase in activity in the inner M25 market as employees continue to return to office based working.     

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Market Comment

Prime office rents have remained broadly stable with 14 of the 16 locations covered by the Glenny Rent Survey remaining stable.  Only two locations in South East London & Kent (Bromley and Maidstone) have seen an upturn in values over the past six months, prompted by supply shortages.

The weakening in occupier demand in the six months to the end of Q1 2022 has created greater uncertainty about the short term prospect for rental growth in the office sector but as occupiers become clearer about their long term plans for flexible office working the outlook should become clearer.    

There are stronger indications that occupiers are returning to office working in Central London office markets and this may, over time, filter out to decentralised locations, particularly with good transport links.   

Freehold owner occupier capital values per sq ft continued to regain some of the ground lost over the pandemic, with major centres across the Eastern M25 (e.g. Bromley, Brentwood and Maidstone) seeing the strongest recovery.    

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John Bell

John Bell

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