According to estate agents Savills, in the first quarter of 2017, rents in London’s West End hit a record high of £122.30 per sq. ft. per annum. This represents an 11% rise on 2016 levels.
Although rent levels are high, in order to attract businesses, many property owners are offering incentives such as rent-free periods for 18 months. Supply is stable, and only 3.8% of West End properties are empty.
The highest demand for offices is from tech and media companies, which account for 22% of tenants.
In other London areas, commercial rents are lower, with some locations on the fringe of the city charging rents of between £40 and £66 per sq. ft. per annum.
Despite high rents mirroring the high cost of property in the capital, rental yields are often lower compared to other regions of Britain.
Commercial rents in Britain rose by 0.88% during the first quarter of 2017. The Eastern region experienced the highest rental growth of 10%.
Some financial experts say that areas like Liverpool, Manchester and Warrington are ideal for commercial property investments. The economy of the North West is forecast to grow by 2.6% a year over the next few years. Rental yields are high and there is strong demand for commercial space to rent.
Commercial mortgages are available through a mortgage broker at good interest rates. Many residential landlords facing higher costs are starting to turn to commercial property in order to increase their profitability.
