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I work in the City of London, and we are moving office to the south bank of the river (near London Bridge) in the coming months. We own the lease on the current building, and I was not surprised to hear that the new premises (which is broadly comparable to the current place) is considerably (25%) cheaper – we took the current building on in 2000 after all.

What I WAS surprised to hear was quite how good the deal on the new place actually is. They are throwing in a couple of a years of the 5 year deal for free. That is a reduction of over 50% !

I was walking around at lunchtime just now, and the signs seem to be everywhere (how did I not notice this before?) – several large empty buildings, TO LET signs down every street.

Can anyone shed any light as to the actual situation wrt commercial property in The City ?

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Can anyone shed any light as to the actual situation wrt commercial property in The City ?

In 2000 I think the rent in the City was £65 per square foot, and Canary Wharf was £11! Lots of companies moved out, and I think the rents are now more equal at £40 - 50.

see The Slatin report

ish.

I'd move back to the City in a flash though. Canary Wharf sucks.

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In 2000 I think the rent in the City was £65 per square foot, and Canary Wharf was £11! Lots of companies moved out, and I think the rents are now more equal at £40 - 50.

see The Slatin report

ish.

I'd move back to the City in a flash though. Canary Wharf sucks.

I've been living in London for a year and have worked in Canary Wharf for all that time. I agree wholeheartedly with your closing comment!

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2 -3 years ago, I read of an estimate that 1 in 7 to 1 in 8 commercial properties in London was empty.

Don't know if this has changed or of any City area specifics though.

The are two main reasons why property companies are unwilling to drop quoting rents (hence high vacancy rates):

1. It provides comparative evidence to be used against them in a rent review (usually every 5 years)

2. Investment properties are recorded in the accounts at market value (rather than historical cost - per SSAP 19). The market value is based on value in use which depends upon the quoting rent, cutting the QR can therefore wipe hundreds of millions of pounds off of the value of the company.

For these reasons property companies are willing to accept a high vacancy rate.

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2 -3 years ago, I read of an estimate that 1 in 7 to 1 in 8 commercial properties in London was empty.

Don't know if this has changed or of any City area specifics though.

In Hitchin, Luton, Watford and Hemel Hempstead there are masses of offices/ industrial units to let everywhere. It has been like this for the last couple of years.

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I've been living in London for a year and have worked in Canary Wharf for all that time. I agree wholeheartedly with your closing comment!

So, is that a clear indictment of architects for the past 25odd years.

All show - no substance.

Maybe Prince Charles was right all along "monstrous carbuncles" and all that - what?

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The are two main reasons why property companies are unwilling to drop quoting rents (hence high vacancy rates):

1. It provides comparative evidence to be used against them in a rent review (usually every 5 years)

2. Investment properties are recorded in the accounts at market value (rather than historical cost - per SSAP 19). The market value is based on value in use which depends upon the quoting rent, cutting the QR can therefore wipe hundreds of millions of pounds off of the value of the company.

For these reasons property companies are willing to accept a high vacancy rate.

Interesting.

We have had various buildings unoocupied due to similar accounting / tax reasons.

Cheers for the Slatin report there No Accountant, a good overview of the situation.

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In Hitchin, Luton, Watford and Hemel Hempstead there are masses of offices/ industrial units to let everywhere. It has been like this for the last couple of years.

slightly OT but the situation is very similar in Leeds - which must be a candidate for the most over-blown property bubble in England, both commercially and residentially. An incredible amount of new development in the last 3 years, and hardly any of it occupied.

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Maybe Prince Charles was right all along "monstrous carbuncles" and all that - what?

I don't have a problem with the architechitural merits of the project, what what! No, what I can't abide is lack of bespoke little shops for dry cleaning, sandwiches, and the rest. Where's the friendly independent bars? I want specialist butchers like the one on Bow Lane in the City.

Apparantly as leaseholder in the Wharf estate you have to put 10 years rent in an escrow account before you move in. This means it's effectively closed to small independents - only the Slug & Lettuces can afford that. No small shops. Just corporate identikits. Why are there 6 branches of boots and not one Superdrug? I hate not being able to excersice choice as a consumer.

(fully realise that someone working in buisness park in Reading will not be too saddened by my terrible plight)

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The are two main reasons why property companies are unwilling to drop quoting rents (hence high vacancy rates):

1. It provides comparative evidence to be used against them in a rent review (usually every 5 years)

2. Investment properties are recorded in the accounts at market value (rather than historical cost - per SSAP 19). The market value is based on value in use which depends upon the quoting rent, cutting the QR can therefore wipe hundreds of millions of pounds off of the value of the company.

For these reasons property companies are willing to accept a high vacancy rate.

Thanks for that, very interesting points I was unaware of.

IMO rent reviews are a nightmare, as are the repair liabilities, many tenants do not know what they are letting themsleves in for. I happily paid 5% extra rent to avoid a fully repairing liability on premises.

Personally, having been 'trapped ' in a 10 year & another 5 year lease on 16,000 sq ft of warehouse/workshop in South London, I would never sign a long term lease again. I'm am so happy to be running an Ebay business with no such long term liabilites.

I know a multi-millionaire landlord who admitted to me that he would never sign a lease like his dozens of tenants do as its to weighted on the side of the landlord. He is of course getting the advantage on the other side of the fence, by signing dozens of leases as a landlord.

I don't have a problem with the architechitural merits of the project, what what! No, what I can't abide is lack of bespoke little shops for dry cleaning, sandwiches, and the rest. Where's the friendly independent bars? I want specialist butchers like the one on Bow Lane in the City.

Apparantly as leaseholder in the Wharf estate you have to put 10 years rent in an escrow account before you move in. This means it's effectively closed to small independents - only the Slug & Lettuces can afford that. No small shops. Just corporate identikits. Why are there 6 branches of boots and not one Superdrug? I hate not being able to excersice choice as a consumer.

(fully realise that someone working in buisness park in Reading will not be too saddened by my terrible plight)

I see it as all down hill for the small shops, partly for the resons you mention. Ebay is the one of the only positive 'refuges' for the small business I have seen recently (but downside is they compete against individual one-off sellers), although some power sellers disagree, but mail order is not suitable for all biz's.

Has anyone ever seen a report / research on the effect of online sales increasing empty property ?

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The link below is to a graph showing London office rents over the past 15 years, and rents are falling again. You would think that developers would have learnt the lessons from the last crash? And while property companies will seek to maintain headline rents by offering incentives such as rent free periods, others are happy to drop rents if they have no comparables to defend.

Oh yes we have falling rents and falling yields in London at the moment, Olympia and York anyone?

Property cycle

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I don't have a problem with the architechitural merits of the project, what what! No, what I can't abide is lack of bespoke little shops for dry cleaning, sandwiches, and the rest. Where's the friendly independent bars? I want specialist butchers like the one on Bow Lane in the City.

Apparantly as leaseholder in the Wharf estate you have to put 10 years rent in an escrow account before you move in. This means it's effectively closed to small independents - only the Slug & Lettuces can afford that. No small shops. Just corporate identikits. Why are there 6 branches of boots and not one Superdrug? I hate not being able to excersice choice as a consumer.

(fully realise that someone working in buisness park in Reading will not be too saddened by my terrible plight)

interesting. That explains why, for instance, there are no cycle shops on the estate despite the growing demand. And why it is such a soulless alienating environment with crap characterless bars and shops.

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IMO rent reviews are a nightmare, as are the repair liabilities, many tenants do not know what they are letting themsleves in for. I happily paid 5% extra rent to avoid a fully repairing liability on premises.

Personally, having been 'trapped ' in a 10 year & another 5 year lease on 16,000 sq ft of warehouse/workshop in South London, I would never sign a long term lease again. I'm am so happy to be running an Ebay business with no such long term liabilites.

Yep, as I understand it too many tennants enter the process without professional representation and end up getting stuffed as a result.

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City and West End rents are now rising and vacancy rates falling fairly quickly. The worst of the City core market was 2003 - share volume has now increased and the banks are increasing their headcount quick quickly at the moment.

Rent yields are very sharp - the UK and european funds are buying everything they can as the property companies are taking profits.

Finally, headline rents underpin the asset value - if a prime city office is let at £45 psf with 2 years rent free on a 15 year lease term to a top covenant the exit yield could be as low as 4.5%. The vendor will 'top up' the rent through the rent free period. Better this than a lower initial rent with less rent free at a similar yield.

Anyway, commercial yields are unlikely to be sustainable for much longer - if the funds are bulk buying then you know that the market must be past it's best! They bought equities in 2000, out of equities and into bonds in 2003, out of bonds in 2004 into property in 2005. You can tell its not their money!

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Yep, as I understand it too many tennants enter the process without professional representation and end up getting stuffed as a result.

I've known some small player tenants have to go bankrupt as they have been presented with an unexpected large bill at the end of their tenancy. One had a bill of £83,000 from the landlord, with bankruptcy the only way out :blink:

People don't seem to realise that ultimately its down to whats in the contract & there is no 'fair play' to speak of. Many don't even take photos of the inside/out when moving in. :o

As 2 out of 3 businesses fail in their first few years, I advise start-ups to have a 'easy-in/out' license on premises (1 month to 6 months ) unless they need serious commitment/security for some reason like a mjor refurb investment.

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  • 442 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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