Banks cut City rents by 40 per cent over the course of the financial crisis
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City of London office rents will rise sharply this year according to a new report
The report by King Sturge shows the rents in the City of London will increase by 10.5 per cent to £47.50 per square foot, whilst rents in the West End will increase by 7.6 per cent to £70 per square foot.
A lack of office space and strong demand have been attributed to the increases, as well as banks dropping their threats to move overseas because of the government’s new tax on bonuses.
This is a significant boost for the market, following a 40 per cent fall over the course of the recession, when banks and City tenants were forced to slash costs.
However the outlook for the rest of the country is not so good, as regional office rents are set to stay low after falling by 10 per cent in 2009, particularly in Birmingham and Leeds. King Sturge says, ‘Demand will remain under pressure outside London as the public sector squeeze begins, though central government relocations and banking may provide upside. Of the major centres, Manchester and Bristol are best placed for recovery’.
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