Canary Wharf Forecasts Strongest Office Rental Growth in Central London for 2016
The area forecast to have the strongest office rental growth this year in the borough of central London is Canary Wharf. According to the latest post from PropertyWire, "Affordability is the main driver for rents to increase, along with the development of Crossrail, integrating Canary Wharf with the rest of inner London, as well as a general shortage of available offices across London."
Furthermore, the property would push tenants seeking high quality affordable offices eastwards, with Canary Wharf well placed to benefit. The expansion of technology and creative firms would contribute to the shift, as they are growing fast and increasingly seeking larger offices, as further noted by the same post.
Moreover, Dan Gaunt, Head of City Leasing at Knight Frank, said, "The gap between rents in traditional core areas and other sub-markets has not previously been so small. Occupiers are making decisions based on quality of product and amenity, availability of scale, adjacency of the workforce and not by postcode."
Meanwhile, Knight Frank added on to report, "Shoreditch's increase in office rents will principally be driven by Tech sector expansion, and the more mature, established heavy weight tech firms have firmly established a London rival for California's 'Silicon Valley' in the area, which is set to continue to grow over the next 12 months."
The tech sector was the most important source of demand for office space in Central London in 2015 for the fifth consecutive year, as further reported by the same article. The report went on to show how Central London's vacancy rate levels hit a 14-year low, as well as the lowest record since the first quarter of 2001, with the West End at 3.4 percent.
In addition, James Roberts, Knight Frank Chief Economist, said, "What has surprised everyone is that Shoreditch office rents have got so close to those of the City Core. Everyone assumed the tech firms could not afford rents that high."