A UK property company has successfully fully let office space on Baker Street at a substantial premium, marking an optimistic opening to the commercial sector in 2025.
Derwent London announced the pre-letting of 204,300 sq ft to five tenants at their upcoming 25 Baker Street W1 complex, set to be completed by the end of the year, as reported by City AM.
"These lettings highlight the strength of demand for high quality, design-led and amenity-rich spaces in the right location with class-leading sustainability credentials," said Derwent. The company achieved a 16.5 per cent premium on the rental value appraisals, setting a new standard for the area.
Rental prices across the building span between £98 and £113 per square foot. Owning a portfolio predominantly in central London including 63 buildings valued at £4.8 billion as of June 30 last year, Derwent is the largest London-focused office real estate investment trust (REIT).
By 2030, Derwent intends to be a net-zero carbon business. Paul Williams, CEO of Derwent, attributed the exceptional rental rates to "positive structural market trends" and a lack of prime office supply in London's West End – partly due to new energy efficiency regulations rendering many office spaces unrentable by 2027.
The market is witnessing a 'flight-to-quality', with the pursuit of sustainable, 'smart' workplaces being the primary force behind office take-up in 2024. Additionally, companies are increasingly mandating staff to return to the workplace.
Just this week, FTSE 100 advertising behemoth WPP joined the movement, instructing its workforce to be in the office four days per week. This shift is expected to stimulate demand for commercial office space in London and could potentially reverse the downsizing trend that has been prevalent since the pandemic.
