Businesses are starting to consider locating in other areas of London apart from the West End, it has been suggested.
Last week, property consultancy Cluttons reported that although this district of the capital remains stable, rising star sub-markets are the ones to watch.
The firm explained that Noho, Marylebone, Soho and Covent Garden are all attracting significant interest from companies seeking new headquarters and office premises.
These areas have seen rents rise by an average of six per cent in the six months to the end of Q1 2012, Cluttons indicated.
Commenting on the report, Capital Economics’ chief property economist Ed Stansfield said it was “no surprise” that companies are looking at different areas of the capital.
“Interest is gravitating away from the West End into these other areas, not least because there is not a lot available,” he stated.
“I don’t suppose there is a massive amount more available in those other markets, but I suspect that the supply environment is slightly better. More fundamentally, I think that West End is getting too expensive for people.”
He said it is “quite natural” in the current economic environment that companies who are facing uncertain times may think they can get value for money elsewhere in London.
“I suspect that we will see more of it until we see rents equalise either because West End rents come back down a little bit or rents in the rest of London are bid up to higher levels, so that there is less of a differential,” the expert predicted.
For companies seeking London office space, serviced premises represent one potential option.
Rather than having to take out a full lease on a London property – in the West End or elsewhere – firms can simply hire furnished, fully-equipped offices.
They can take advantage of manned reception areas, maintenance services and cleaning, allowing them to focus on increasing sales and driving revenue.