Report reveals London races ahead of global competitors as West End office rents soar

The London Property Alliance has today (4th of July) published the third issue of its quarterly Global Cities Survey. The research, which is undertaken by Centre for London, charts the economic recovery of London, New York, Paris, Berlin and Hong Kong and provides an analysis of the latest data available across 19 economic and societal indices.

This new report reveals London’s economy has put in a strong performance in Q1 of 2022, outperforming competing global cities in areas such as economic output, employment, rental growth and foreign direct investment.

The UK capital recorded its highest employment rate compared to competitors in the first quarter of this year, signalling the city’s economic turnaround. London employment is now more than eleven percentage points ahead of New York compared to 2019 benchmarks.

And in a further vote of confidence, London’s West End and City rents (for prime space) rose by 12.2 per cent and 7.7 per cent respectively (Q1 2022 on Q1 2021).

But both New York (Midtown) and Hong Kong saw negative growth. Weakening demand is reflected in office vacancy rates for both cities (21 per cent and 10.9 per cent respectively); despite a slight increase, rates of Central London vacancies remain firmly in single digits at just 8.7 per cent.

Alexander Jan, chief economic advisor to London Property Alliance and one of the authors of the survey, said, “The findings of the latest Global Cities Survey are encouraging and demonstrate London’s strong economic performance and recovery against international competitors despite the wider UK’s economy slowing down.

“Post-pandemic trends relating to our travel, working and shopping habits are clearly a feature of everyday life in London, and our rival cities. We must not let disruption to our airports, railways and TfL services derail the green shoots of recovery.”

The analysis shows that New York and Hong Kong are struggling to recover in some key areas. Hong Kong still has a range of Covid-related restrictions in place in its quest to achieve “dynamic zero infection”.

Charles Begley, chief executive of London Property Alliance said, “London continues to play a critical role in supporting the UK’s economy and post-pandemic recovery. Strong performance in employment and commercial property, particularly in central London, is undoubtedly a vote of confidence.

“The government’s commitments to ‘level up’ the country are welcomed, but this must not come at the expense of the capital’s prosperity. Like other global cities, London’s recovery is precarious. Any decision making in policy and funding must reflect London’s role as the UK’s economic powerhouse as well as its very special international status.”