London office rents under pressure

According to an article in Property Week (PW), office rents in London are preducted plummet by up to 40% in 2020/2021.

PW reports on data from the Society of Industrial & Office Realtors (SIOR) that forecasts a slump in West End office rents from an average of £94.88 psf to £56.22 psf, representing a decrease of 40.7%.

Overall city rents are similarly predicted to fall from £58.81 psf to £39.26 psf, representing a drop of 34.35%. Meanwhile, Midtown office rents are predicted to fall 24% from £68.06 psf to £51.62 psf.

While these predictions may ultimately not be borne out exactly as forecast, they nevertheless highlight the depth of this crisis and how its impact should be expected to be at least as severe as the Global Financial Crisis (which lead to a 36% drop in the average London office rent).

The data highlights that the recovery will not occur overnight and property owners should expect the slump in rental activity (and thus rents) for at least the next 18 months.

Thus, Ogilvy Capital has adjusted its investment focus for office properties from grade A properties in B and C locations to grade A and B properties in A (prime) locations without leasing events in 20/21.