An introduction to the 2020 London Report
2020. A new year. A new decade. And indeed a new British government intent on “getting Brexit done”. We are much closer to the economic and political stability that decision-makers have hankered after ever since the EU referendum in 2016. The consequence? 2020 will go down as a year of rebounding activity on all fronts.
Not that 2019 was quiet.
2 minutes to read
- Greater political clarity is already driving lead indicators higher
- London remains a magnet for businesses and investors alike
- 2020 looks set to see another year of robust activity
As we have long argued, London would remain a magnet for businesses and investors alike, a claim now backed by both leasing and capital markets’ evidence.
This resilience reinforces our view that London is one of a small number of truly global cities: central to the financial universe, able to draw in businesses, investors and talent from around the world, and as a consequence, almost uniquely placed to offer investors both stability and performance.
Greater political clarity is already driving economic lead indicators higher. Our own perspective confirms this, with many businesses now pressing ahead with expansion or relocation plans. They do so against the backdrop of a very limited choice of available office space and a development pipeline that is now often spoken for far ahead of completion.
The result is that rents will continue to rise over the next five years. We forecast that prime rents will rise by 20% in the City by the end of 2024 and by 15.7% in the core West End markets of St. James's and Mayfair.
For businesses, these projections inevitably pose challenges on both competitive and cost fronts. Yet the balance of negotiating power will remain nuanced. Customers are willing to pay premiums not just for high quality offices, but also for a more customised product experience.
And as we demonstrate, the nature of corporate demand for space continues to evolve rapidly. Landlords and developers need to be ever more conscious of changing expectations.
However, we draw immense confidence from the city’s history of evolution and rebirth. Our report is centred on this premise of reinvention; something London has done repeatedly in order to maintain its influence, dominance and attractiveness to businesses, talent and investors.
"We have used the term ‘reLondon’ to encapsulate this process of constant reinvention; something we expect will be a defining feature for London in the ’20s."
Now is the time to re-examine this ability and the long-term opportunities it creates for real estate markets. It is in this context that we offer our opinion on four specific themes, tightly interlinked by the common thread of reinvention:
Reprioritising customers
Reaffirming influence
Reenergising demand
Reimagining space