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Probably falling into a trap even commenting on this, but thought worth mentioning that available data on core office leasing transactions does not tell us that “London office rents are in freefall”, as mentioned here. https://www.thetimes.co.uk/article/valuers-accused-of-being-in-denial-as-office-rents-tumble-3c8t8vf6v
Our Q3 Report outlines only a 1% drop in overall rents so far in 2020 vs 2019 on newly-signed deals for core office space (across all grades-of-space). https://www.egi.co.uk/news/loma-q3-2020-a-market-down-but-not-out/
This does *not* include deals within serviced office spaces – I can’t directly speak to any ‘freefall’ therein, but it would follow that this is the case if operators are losing tenants faster by virtue of tenure flexibility... https://www.ft.com/content/742d321a-6c40-42cd-b78d-59110aac4650
…But am also unsure as to the actual role of Serviced office space generally within valuations. Famously tough to pinpoint vals of SO compared to ‘traditional’ office spaces. Cushman white paper here shows their methodology: https://www.cushmanwakefield.com/en/united-kingdom/insights/valuation-of-flexible-workspace
Not sure about implying disingenuousness at this point on the part of valuers.
Could be a severe correction forthcoming but to what extent are they meant to factor predictions in against the currently-available data? Perhaps others can enlighten me.
Could be a severe correction forthcoming but to what extent are they meant to factor predictions in against the currently-available data? Perhaps others can enlighten me.
We could use GFC 08-09 rental patterns as a guide but, unlike a decade ago, we do now have measurable data on qualitative aspects of high grade space influencing rents:
Connectivity:
https://www.egi.co.uk/news/what-does-the-trend-towards-connectivity-mean-for-the-london-office-market/
EPC/(~'Green credentials'~): https://www.egi.co.uk/news/epcs-can-sustainable-offices-bolster-profits/
Connectivity:
https://www.egi.co.uk/news/what-does-the-trend-towards-connectivity-mean-for-the-london-office-market/
EPC/(~'Green credentials'~): https://www.egi.co.uk/news/epcs-can-sustainable-offices-bolster-profits/
Video here discusses those GFC 08-09 rental patterns against historic/current supply dynamics. I think it’s important to remember all of these aspects when considering how markets are likely to move in this vortex of weird circumstances
(/end). https://www.egi.co.uk/news/transactions-tumble-across-london/
(/end). https://www.egi.co.uk/news/transactions-tumble-across-london/
