London office space set for boom year

Property specialists Knight Frank have today issued a report suggesting that the London office market is set for a boom 2010 due in the main to supply difficulties. It is forecast that the value of office space in London could increase by up to 43% with rents set to rise by 19%. These are exceptional figures but then again the London office market is an exceptional market!

As you would expect from what is effectively a mini economy within the UK, the London property market has a wide variety of property available at very different prices and of very different quality. The main reason for the expected boom time in London is purely and simply because of a lack of new commercial property coming online with many developments having been mothballed or cancelled outright when the credit crunch hit home and the economy turned down.

Even though a number of prominent UK property developers have stepped forward with new ideas and new property developments, these will take some time to bring online, hence the short-term issue with supply. It is forecast that actual available office space in London will fall by 14% this year while the number of new office schemes completed will fall by up to 26%. When the new supply comes online we should see prices and rental costs start to stabilise.