The long-awaited arrival of the new Elizabeth Line has tempted companies to base themselves outside of London’s traditional office hubs, sending office rents soaring in some of the capital’s lesser-known business areas.
The Elizabeth Line, or Crossrail as it was originally known, opens to the public today, having first been announced 14 years ago. The 62-mile line runs through the middle of London, connecting Berkshire to Essex and southeast London. Commuters will be able to get from Paddington to Canary Wharf in 16 minutes — about half the time it previously took.
In anticipation of its opening, in recent years companies have ventured farther away from the usual office bases in the City of London or the West End, which has put a rocket under rents in some of the capital’s smaller office markets.
Since 2008, when Crossrail was first announced, rents in Clerkenwell and Shoreditch, on the northern and eastern edges of the City, have surged by 123 per cent, according to data from Cushman & Wakefield, the property agent.
In Paddington, where the new station is the size of three football pitches, rents on prime office buildings have risen 45 per cent over that time.
By contrast, Cushman found that office rents in the City have moved 21 per cent higher since 2008. In the West End they have nudged up only 2 per cent. Historically these two areas were London’s two best-performing areas for office rents.
Patrick Scanlon, head of UK offices insights at Cushman & Wakefield, said that the building of the Elizabeth Line had helped in “changing the dynamic of London’s commercial real estate market”.
He added: “It encouraged occupiers to consider new locations and real estate developers to deliver high-quality office schemes in new areas of the capital which had previously been largely ignored. Much of this was due to the prospect of improved connectivity from east to west.”
There has been much talk among the big developers and landlords of a “flight to quality” after the pandemic. Businesses are keen to use modern, best-in-class offices to attract workers amid a hot jobs market, while having the most sustainable space possible is helpful for their net zero ambitions.
However, Ben Cullen, Cushman’s head of offices, believes that “quality” also encompasses a building’s location and proximity to large transport hubs.
He said: “We have seen a clear flight to quality in the office occupier market, which goes beyond the quality of the building; it incorporates the quality of the local area, including places to socialise and, crucially, transport.”
Underlining the importance of connectivity, office rents in King’s Cross and Southbank, with London Bridge on its doorstep, have also outperformed, Cushman found.
Cullen said that offices in Clerkenwell and Shoreditch had been the “real Crossrail winners” and he expects that rents there will continue to outperform the wider London market.
The Times (Tom Howard) - https://www.thetimes.co.uk/article/office-rents-soar-along-elizabeth-line-route-tx5tmmz8m
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