The demand for office space in London is rising further, creating a range of excellent opportunities in commercial property investment. Office tenants are increasingly seeking imposing, flexible serviced offices in and around London.
While Brexit has had an impact on this market, the demand is largely fueled by the technology boom, rise of co-working spaces, and the ease with which policies allow landlords to convert office space into residential homes – something that has increased the amount of available living space in London, but at the cost of thousands of square feet in office space.
In April this year, permanent legislation was created to help developers meet the demand of the housing market by easily converting office spaces into residential homes, whether the space is occupied or vacant at time of application. This conversion can be completed without the need for planning consent – permitted developments are sufficient in most cases.
Shrinking supply is just one factor that has improved investment prospects in this sector. Regus is by far the biggest player, with a market capitalization of £2.5bn, but WeWork was recently valued at £12.9bn, and Deloitte Real Estate reported that the serviced office market in London had grown by 67% last year. Growing demand means that there is room for new operators to enter the space and generate an income very quickly from even smaller buildings in central London.
While London office rents may fall if banks and businesses need to move away from London following the exit from the EU, serviced office operators can capitalize on business’ need for flexibility by commanding premium rents for the most flexible contracts.
If you have office space available for sale, or would like us to source commercial properties for you, please speak to our team today.
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This post was written by Innermedia Ltd