News By Tag
News By Location
BNP Paribas Real Estate's St James’s Office Market Report
In its latest research report into the commercial property market of St James’s in central London, BNP Paribas Real Estate reports that the banking and finance sector continued its resurgence in the area during 2011.
In the “St James’s Office Market 2011” report, the international property adviser estimates that there is only 253,000 sq ft of Grade A office space now available in St James’s, with the vacancy rate falling from 5.6% to 3.0% over the 12 months up until December. During this period prime office rents in St James’s and Mayfair rose by 11%, mainly due to the return of hedge funds and niche financial companies to the market. During 2011 there were no transactions in excess of 50,000 sq ft, with the majority of lettings for properties under 5,000 sq ft.
The most significant transaction over the last year was at St James Gate, 14-16 Cockspur Street where Federative Republic of Brazil purchased a freehold interest for occupation, totalling 32,000 sq ft, at a price of £24m.
Mark Hickmott, Director of West End Agency at BNP Paribas Real Estate says: “Rental values have recovered strongly since our 2010 report, driven by the lack of good quality accommodation. At the end of 2011 St James’s and Mayfair prime rents had reached £100.00 per sq ft, rising 11% during the course of the year.
“We expect that prime rents will continue to come under pressure and further rental growth is anticipated, although the rate will probably slow over the next couple of years. Prime rental values are anticipated to reach £105.00 per sq ft by December this year and then £110.00 per sq ft by the end of 2013,” he adds.
The report shows that in 2011 the value of investment transactions increased by 15% to £281m and that prime yield in the West End have remained stable at 4.00% since September 2010.
The St James’s will be boosted by a £500m regeneration as part of the “10-year strategy” by the Crown Estate. This includes delivering more than 600,000 sq ft of new and refurbished offices, increasing the provision of high class residential accommodation, bringing in new retailers and improving the area’s public areas. With the completion of The Crown Estate’s St James’s Gateway redevelopment early 2013, zone A rents have the potential to rise to £225 per sq ft at the eastern end of Jermyn Street.
BNP Paribas Real Estate forecasts that in the residential market prime London rents will grow 27.6% over the next five years, outperforming the UK where growth of 20.5% is expected.
# # #
London based commercial property PR agency and media relations consultant providing public relations services to clients in the UK and in Europe.