City of London office market sees strongest recovery on record

Rents for City of London offices have proved more resilient in recent years than during previous market downturns and recoveries, according to new research.

The analysis from real estate firm Knight Franks indexed City of London office rents at 100 for the pre-downturn peaks recorded in the fourth quarter of 1989, the third quarter of 2001, and the fourth quarter of 2007.

This showed that rents in the most recent downturn found a floor and moved into recovery far sooner than during the early 1990s and early 2000s downturns and overall the City office market has seen its strongest recovery on record.

Also, the current recovery is proving to be far more enduring than that seen after the early 2000s downturn. Indeed that market cycle lasted just six years, with the arrival of the global financial crisis in late 2007, the report points out.

It also explains that the outlook is good as it is over seven years on from the market peak for rents, and growth is still occurring, and expected to continue.

‘These figures demonstrate that the City office market has proved far more resilient in recent years than anyone would have imagined back in 2007 when the financial crisis began,’ said Bradley Baker, central London tenant representation partner at Knight Frank.

‘One of the keys to the City’s success has been its’ significant diversification away from an over-dependence on the financial sector in the past and instead embracing and attracting  technology and media firms such as Saatchi & Saatchi, Amazon, Hachette and Uber,’ he explained.

‘Unlike previous downturns, the current recovery began within two years of the initial crash and has been sustained for over five years. This compares favourably to the 2001/2003 and 1989/1991 crashes which took over three and four years respectively to post a recovery, and even then they were short lived,’ he added.