While bad news for landlords that aren’t operating in the West End area, the City of London continues to increase office market supply while the demand sharply falls. This stagnation in the traditional office space market presents a clear opportunity for ambitious businesses that seek to relocate under more-favourable terms to strike while the iron’s hot.
But not so fast—how likely is the market to continue the steep decline in pricing? Many experts maintain that normal prices will not return to the office market until at least 2013—which astonishingly is the general time that most traditional office space leases will expire. While it may be quite an attractive option to accept ballooned rent free periods in exchange for a traditionally-high priced, traditionally-restrictive lease agreement, perhaps a serviced or managed office solution with a short term rental agreement makes more fiscal sense for the frugal company looking for a great office space.
In Soho alone, current rents have seen steady declines to well below GBP60.00 per sq. foot of space. While this is not the case with the more prestigious areas of business like the West End, it hardly means that prices are locked in for that area either. It is entirely possible for the resilient business that selects a short term office lease to eventually find an affordable property in a historically-exclusive district during this caustic economic period while landlords scramble to revitalize the market with increasingly attractive offers. Instead of being chained to a lease that lasts until the end of this opportunely favourable situation for office seeking tenants, a short term lease will provide the flexibility to hold a wide array of options when things eventually go back to normal.
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