Europe needs swagger

London skyscrapers see rent prices boom


The cost of renting office space in the tallest buildings in London has surged almost 11 percent in the last six months, as construction of a number of high-profile skyscrapers have been completed and occupancy rates are at multi-year highs.

Office rent prices in Hong Kong still top the cost of leases over New York, Tokyo and London at $255 per square foot a year. But growth levels in the British capital were higher than any other city in the world.

The City of London at sunset
Allan Baxter | Photolibrary | Getty Images

London annual rents surged 10.7 percent to $122 per square foot, according to data from luxury real estate agent Knight Frank. It also said that vacancy rates had fallen to their lowest levels since 2001.

"Occupier confidence has obviously played a major part in the increase in tower rents achieved across most of the major global cities. However, the main point of interest is that this confidence has coincided with occupiers being more prepared to compete for space that was traditionally outside their preferred locations," said Global Head of Office Agency at Knight Frank, William Beardmore-Gray.

"London is a good example where these locational barriers are being broken down with oil, tech and private equity companies relocating across London from their more traditional West End locations," he said.

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London has also benefited from new high-profile tower completions, that have "delivered space to the market capable of setting new benchmark levels for rents," the report found.

Buildings including the so-called "Walkie-Talkie" and the Leadenhall building, also known as the "Cheesegrater" in London's financial district, opened last year and are ranked as some of the tallest skyscrapers in the city.

The Shard, which was almost entirely funded by Qatari money is the second tallest building in Europe after the Mercury City Tower in Moscow and is amongst the top 100 tallest buildings in the world.

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Rents in the top floors of high-profile buildings in both the Shard and the Cheesegrater are both thought to be around $138 per square foot a year, according to media reports earlier this summer.

San Francisco was the best performing U.S. city, posting 8 percent growth in annual rent prices at $105. This compares to the 2 percent growth seen in New York, which charges $153 per square foot a year on average.