King Sturge forecasts 50% rental drop in London over next 2 years

The UK is facing a very challenging economic climate but 'unprecedented' opportunity has arisen in the office property market, according to international property consultant King Sturge. In its latest research report on the UK office market, King Sturge points to a number of positives, including the outlook for UK regional centres. Rental reductions there are expected to be much less severe, with these cities continuing to enjoy a less volatile rental cycle than London and the Southeast.

In the capital, King Sturge is forecasting rental reductions of up to 50% over the next two years, with the City and West End likely to be the first to emerge from the downswing next year. In addition, with office capital values having fallen by 35% since 2007, a shift in yields, lower interest rates and a weaker currency, the time is right for investors to consider assets, particularly in London.

'For occupiers across the UK, this year offers the widest range of choice and the most attractive incentive packages for many years. Rents are lower than a year ago and in some cases it’s possible to obtain as much as two to three years rent-free,' said Jeremy Richards, head of Regional Office Agency at King Sturge.

Mark Bourne, head of London Office Agency added: 'The correction will be felt more greatly in central London than in the regions, having experienced a far greater growth cycle over the last three-four years.'

The report covers 20 locations across the UK, provides city-specific data and commentary on a market-by-market basis.