Top rents in London's West End surpass City

Top prime rents in the London's West End core business district are nearly double those in the City of London - the largest ever disparity between the two main markets in the British capital, research by property advisor CB Richard Ellis has established.

Rents have grown more quickly in the West End than the City due to fundamental differences in supply and demand conditions. Faster financial and business service employment growth has combined with severe supply constraints in the West End. Since 1984, the stock of office space in the West End has grown by just 12% compared to 36% in the City.

CBRE said in its report that only a small number of tenants pay rents close to the top prime rents, particularly in the West End. Over the last 12 months, only 10% of West End deals were within 80% or more of the market’s top prime rent. The equivalent figure for the City is 24%. 'Top prime rental differentials are a poor guide to the discounts that would be available to most tenants by moving between the West End and the City.'

CBRE stressed that very few tenants move between the two areas, despite the potential rent savings. 'For West End tenants paying top prime rents such as investment managers, hedge funds and private equity companies, the City is not considered an alternative. They would lose clients and staff if they were to move,' the report said.