Office rental growth forecast to near 20 percent


A new report suggests that the market for London office space is now well on the road to recovery, with rental growth expected to be around 19 percent in 2010.

This, in turn, should lead to an increase in commercial property values as buyers are prepared to pay more for the higher returns they will receive. The uptick has been driven not only by the revival in global fortunes, as the UK recently became the last major economy to exit the recession, but also by a lack of new developments, indicating increased competition for existing properties is likely.

Crucially, such a recovery is thought to be sustainable, because demand appears relatively stable. In fact, it is looking increasingly likely that problems in the office market will resurface in a different form in 2011, when the lack of development could result in a supply bottleneck for new tenants.