Partner, Richard Clarke, based in our central London agency, joined us following our merger with Matthews and Goodman in June 2022. He believes the London commercial market is in ‘rude health’ despite other forecasts expressing a concern. We caught up with Richard, who has 35 years’ experience in the sector, to find out his thoughts on the impact of rising interest rates, the Ukraine war, and the cost-of-living crisis on the occupation market due to London being dominated by leasing and a lack of supply.
“I believe the increase in demand for high-end office space in London that focuses on ESG and a welcoming environment for companies, instead of nondescript office blocks which were more prevalent in the pre-COVID market. Despite forecasters predicting challenges, the commercial market in London is currently in a state of rude health, and concerns around economic shocks such as spiking inflation and interest rate rises are not causing it to slow down.
“Headline commercial rents are around 10 per cent higher than they were pre-COVID, which will offset the squeeze on capital values caused by softening yields. The major shift in thinking has been towards what offices are offering to their occupiers. Our advice to our landlord clients now is to ensure office spaces are as attractive and sustainable as they can be. Gone are the days when companies will rent space and fit it out themselves – so many now want the office to have everything in place from day one, whether it’s superb kitchens, breakout areas and meeting facilities, or proper ventilation and air conditioning that actually works and much more.
“London remains not only the capital of the UK but is one of the world’s great cities and people will always be attracted to it, however a poor work environment with a good postcode will no longer command the rent it once did. Landlords have to be savvier. Those that invest in their office spaces are seeing occupiers willing to pay higher rents for them – the market is definitely shifting in this direction.
“There’s no doubt it is not all plain sailing, but with the prevalence of leasing in the commercial market, decisions have to be made by occupiers and landlords when leases come to an end. These decisions are what shape the market and keep it moving despite the external pressures on it. Because of this, I think London’s market is actually in a great place right now, and as long as firms are still looking to the capital to do business, I think it is likely to stay healthy.”
“The merger will give Fisher German a major presence in London and other major cities, and the company will now benefit from our years of expertise in those commercial property transactions. In turn, Fisher German’s superb knowledge of the development, planning, land, and rural markets will complement our services brilliantly. The firm is stronger and more informed than it has ever been, and we look forward to continuing our work in London and beyond as the economy moves forward.”
