UK Property Market Outlook: Week Beginning 25 January
Tenants are taking advantage of falling rents to re-think their commute in one major London business district
3 minutes to read
While some people have gravitated away from central London during the pandemic, the strength of activity in Canary Wharf’s residential lettings market shows there is also movement in the opposite direction.
Falling rents in the capital has sparked a wave of upsizing as more people work from home. However, in Canary Wharf it has brought some closer to the office, demonstrating how the “escape to the country” trend is not the only way Covid-19 is changing behaviour.
“I can barely remember a time when we were as busy,” said Christopher Paxton, head of lettings for Knight Frank in Canary Wharf. “Tenants are coming from all over London and the south-east including places like Essex because they don’t want to commute any more. Void periods have gone up from 7 days to 4 weeks due to higher levels of stock so there are some amazing deals to be done.”
The vast majority of tenants in Canary Wharf are single or couples with no children and work in a diverse range of sectors dominated by finance. The appeal of walking to work has been heightened by the pandemic, said Christopher.
Average rental values outside of the new-build market in Canary Wharf fell by 15% in the year to December, replicating a trend across the capital.
While supply in London was boosted by short-let properties switching to the long-let market, demand fell as international student and corporate tenant numbers declined.
In the final quarter of last year, viewing numbers in Canary Wharf increased by 124% compared to the same period in 2019, which compared to a London-wide average rise of 53%. Meanwhile, tenancies started in the same period were up by 58% compared to an average increase of 28% across London.
Furthermore, Knight Frank’s Canary Wharf office received the highest number of lettings enquiries in the capital from listings portals, phone calls and the internet in the Christmas holiday period between 23 December and 4 January.
“Tenants want as many bedrooms as they can afford,” said Christopher. “Studios are unsurprisingly the least popular part of the market at the moment. Everyone comes armed with a tape measure so they can see where the desk will go.”
Canary Wharf is one of a number of London hubs that will generate stronger residential demand after the pandemic, according to William Beardmore-Gray, global head of occupier services and commercial agency at Knight Frank.
“The millions of words published around the death of the office have proven to be incorrect,” he said. “That has been underlined by lockdown 2 and 3 as people realise they miss the interaction and innovation that comes from getting together.”
“I’m not surprised to see more workers coming back into Canary Wharf. The area has fantastic transport links, a critical mass of high-quality offices, the river, green open spaces and Crossrail. All locations close to significant transport hubs will benefit over the next 5 to 10 years from having a one-stage commute and providing amenities to live and work along with the eco-system for smaller businesses to thrive.”
There is 7.6 million square feet of active office requirements in London at the moment, Knight Frank data shows.