May 5, 2003—Chesterton Research has recently concluded a survey into the movement in prime rental values between 1998 and 2003 concluding that City and West End office rents have declined dramatically since their peak in 2001.
The last 5 years began in 1998 with a period of sustained rental growth across all property sectors nationwide as prices responded to the growing economy, the Chesterton research shows.
Office rents in the UK peaked in 2001, and since then have declined by 20% in the City and West End. Yet the sustained growth of the period from 1998 to 2001 means that values are still up with Docklands recording the highest increase of any of the business centers analyzed at 150%. Other central London offices recorded rises of 67% in the West End, 30% in the City, and 25% in Midtown.
Both industrial and retail rents continued to grow however, throughout 1998 to 2003, and all sectors have shown an increase in rents for nearly all locations. The percentage change for 1998-2003 is higher than the previous 5 years (1993-1998), but less than the growth experienced during the 1988-1993 period.
Outside of London, office rental values have also increased in the M25 centers, again in spite of recent falls in rental values. There have been significant rises in Edinburgh, Leicester, Cambridge and Swansea, which each recorded 50% or more increase.
Only two centers posted a decrease in rental values, with Ipswich taking bottom position at -12%, joined by Coventry recording a fall of 8%.
Office park rents in three locations have more than doubled since 1998, with Swansea heading the list with a 140% increase, followed by Milton Keynes and Teesside/Teesdale. Most locations have seen growth between 20% and 50%, with the average growth at 29%.
Reprinted with permission; copyright 2003 i-FM
