The City lettings market in the first quarter of this year has been completely different to that which we have traditionally experienced over the years. We had a record number of transactions in January with lots of labour mobility in the area creating a surge in the demand for rental accommodation. After this initial surge, demand has tapered off quite markedly and a lack of warmer spring weather has been matched with a lack of new tenants in the marketplace.
The other side of the story is that stock levels are rising with many existing tenants giving notice to terminate their contracts, due in the main, to relocation back to the US or Europe, moving to cheaper properties or more affordable areas and in some cases redundancy.
The current level of supply is greater than demand and this has resulted in a drop in rents of around 10% for those properties which are more homogenous in nature. Those landlords with more unique properties have been more protected from this effect as there is less competition from other properties so they have been fortunate enough to achieve similar rents to those achieved 12 months ago.
The top end of the market is fairly stable with a consistent number of prospective tenants with budgets in excess of £1,000 per week. These transactions are slow to progress but this market is proving once again to be much more resilient against a more negative economic backdrop.
Looking ahead to the next quarter, with a new financial year just beginning for many firms, we have seen a surge in secondment and relocation activity from blue chip firms using the services of relocation agents to house their staff within walking distance of their place of work. These are promising green shoots for the rental market in 2013 in the City area.
Telephone: 020 7490 1122
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