Skyscraper rents in London at record levels despite Brexit

Rents in London’s skyscrapers remain at record levels despite uncertainty caused by the decision to leave the European Union, according to a new index report.

The latest Skyscraper Index from Knight Frank which examines the rental performance of commercial buildings over 30 storeys across the world and shows that rents in London’s skyscrapers remained at a record US$114 per square foot in the first half of 2016.

It means that rents in London’s skyscrapers are among the highest in the world, behind Hong Kong at US$278.50, New York at US$158 and Tokyo at US$149.50. San Francisco at US$113 completes the top five of the index.

These cities lead the world with rents well above all other cities including Sydney, Paris, Los Angeles and Dubai at US$90.75, US$56.50, US$46 and US$43.50 respectively. The lowest skyscraper rent in the index is in Madrid at US$28.50.

‘We have seen strong rental growth in London’s skyscrapers over the past two years, and rents remain resilient in spite of the economic uncertainty arising from the European referendum result,’ said Will Beardmore-Gray, head of consultancy and occupiers at Knight Frank.

‘Demand for space in London’s skyscrapers is undiminished with a number of deals done already in the second half of the year at very good levels,’ he added.

Knight Frank’s also analysis shows uneven growth in skyscraper rents across global cities. Rents for Shanghai skyscraper offices grew the fastest of the cities surveyed, at 7.6% in the six months to June 2016, with Sydney in second place at 6.5%, and Hong Kong third with growth of 5.9%.

Of the top five cities ranked by rental growth, four are in the Asia-Pacific region but Singapore was the only global city where skyscraper rents decreased for the period, with the 7% drop attributed to oversupply in the market.