The corporate lettings market in London is showing signs of a resurgence as companies allocate more money towards renting prime properties to attract senior employees from around the world.
Marsh & Parsons, estate agents, said in the first quarter of the year, there were 10 per cent more searches from relocation agents seeking prime properties for employees than a year ago – a 16 per cent increase compared to the first quarter of 2009. Corporate rental budgets also rose by 7 per cent in the first quarter of this year.
This follows a period at the start of 2009, during the recession, when companies cut back on employing overseas staff and appetites to spend heavily on prime rental property ‘fell off a cliff’.
“London’s economy is continuing to bounce back strongly, and this is reflected in the surge of business we are doing with city firms and their intermediaries,” said Peter Rollings, chief executive of Marsh & Parsons.
“Relocation agents are typically an expensive outlay for organisations – used sparingly to find ideal prime property for very senior employees. It’s encouraging news that city firms have faith in London’s economic revival and are once again commissioning them to entice the top business talent from across the globe.”
As more companies commit greater resources to finding and renting prime rental properties to attract and relocate senior staff to London, the average budget for a mid market corporate let has risen to £747 per week - 14 per cent higher than a year ago.
If the corporate lettings market shows the same seasonal growth as it has done in the past two years, average rents are expected to hit £925 per week by the end of the second quarter of this year.
The most pronounced surge of activity in corporate lettings has been in searches for high-end properties with a rental value of more than £2,000 per week. In the first quarter of 2011, there was more than three times the number of searches in this category than a year ago.
“The wider London rental market has been heating up for some time – but even this is being outpaced by the resurgence in demand for corporate rentals,” said Mr Rollings. “The growing appetite from City firms for top of the range properties is being contrasted to the slow and steady supply of prime properties entering the rental market – and this is forcing rents northwards.
He said wealthy bankers are still being drawn to areas like Kensington and Notting Hill to enjoy the kudos of living in such an exclusive postcode. “City companies are having to up their budgets to secure top-tier properties in such competitive markets,” he added.