A report commissioned by estate agent Savills has suggested that London’s outer boroughs could provide greater office flexibility, as workers look for shorter commutes and a better working environment.
Spotlight: London Mixed Use Development suggests that the capital needs a combination of more homes and workplaces beyond central London, potentially offering a huge opportunity for office space located in the less congested London outer boroughs.
Rapid rent rises in central London locations, including City, West End and Docklands, while the outer boroughs have shown flatter growth, also adds to the attraction of office space outside of the city.
Croydon tops the list as the hottest market for office rental growth in London and the South East, with office rents expected to rise by an average of 27.8% a year over the next five years, surpassing office rental growth in the City and West End, but starting from a lower base.
Based on the latest estimates of office-based employment growth in London, the report suggests that an additional 4 million sq ft of commercial office space is required every year, equivalent to 1% of existing stock, or three buildings equivalent to The Shard per annum.
The estimate of demand, split between inner and outer London boroughs, also shows that a quarter of the additional office space will be required in the outer London boroughs – but current share of new offices in development, depending on timing of delivery, is only 7%, equating to around 2 million sq ft.
This figure will need to increase if the new emerging outer London office locations become reality.