The City’s office market is expected to decline by 3.8 per cent this year, according to a survey by property consultancy Daniel Watney.
Rental expectations in the City will decline 3.7 per cent next year, sharply down on the expected one per cent fall projected for 2018 in November, the survey found.
The West End is expected to see a decline of 4.5 per cent for 2017 followed by a 2018 decline of 2.6 per cent.
The survey also found that the five-year average growth is static for both the West End and City markets despite projections being revised upwards from November when they were projected to see 0.8 per cent and 0.5 per cent average declines respectively. The West End market is projected to return to positive growth in 2019.
Meanwhile, the average office rents across key European markets will increase by 1.8 per cent annually in the next three years, up 0.2 per cent on the previous forecast in November.
Markets including Madrid, Lisbon and Barcelona will likely see increased growth expectations for 2017 of over 100 basis points compared with November. Berlin is the other top ranked location for office rental growth, with average annual growth of 4.2 per cent over the next three years.
Richard Garner, head of the commercial agency at property consultancy Daniel Watney, said: “While the projection for London’s office market isn’t hugely positive, it is important to bear in mind that the market is highly subject to the nature of the UK’s Brexit deal.
“If a deal is secured which avoids EU consumers from paying extra to access UK financial services, London’s appeal as one of the world’s best places to live and work could preserve confidence in the City’s office market.”