London’s City Fringe market has seen average Grade A rents go up by 87% over the course of the last six years, according to international real estate advisor Savills.
The best new buildings are now trading at just a 3.5% discount to the equal quality of building in the City Core, which produces a saving of around £1 per sq ft.
Whereas, the once ‘cheap’ Central London office location has grown into a leading tech address and Savills says this success will continue with several new mixed use projects under development and more in the pipe line.
The research by Savills shows that in the first quarter of the year, average Grade A rents in the City Fringe reached £59.42 per sq ft, in comparison to the £61.60 per sq ft rate for the City Core’s non-tower Grade A office buildings.
This has been accelerated by new office developments such as EC1, Crosstree’s Bower Development and Derwent’s White Collar Factory, along with key deals to CBS Interactive, Stripe Limited, BGL Group and Adobe.
Savills’ research team associate, Ben Raywood, said that the City Fringe has emerged as a fall-out office location which offers low rents to the West End and prime City Core markets.
He said that the growth has come in conjunction with the tech sector’s success to become the latest phenomenon in the offices market in London and a business location recognised throughout the world.
Mr Raywood added that those landlords who have adapted their buildings to suit the new generations of prevalent digital and tech occupiers have seen the best rents, with a likely continuation for the ‘right’ buildings to see growth and strong rents.
The Savills 12 Cities report states that the City Fringe rental increase is not only evident in London, as the findings show that digital, creative and tech office rents in San Francisco and Hong Kong also rose by 48% and 52% respectively in the period of December 2008 and December 2015.