The Crossrail service which was dubbed the Elizabeth Line last month in celebration of the Queen’s reign and 90th birthday this year will be unveiled in early 2018. The Crossrail effect has been widely discussed in residential property market circles. This hot property topic refers to the large spike in property values in areas within proximity to newly built Crossrail stations across London. The areas involved have become an extremely attractive prospect for property investors and is tipped to be a highly desirable venture, with asking prices of homes along the line soaring by up to a third in the last year.
Although residential property prices have been analysed in reference to the Crossrail stations, coverage of how the new stations will affect the commercial office rental market is virtually non-existent. It has been reported that house prices along the Elizabeth line will increase by up to 3.3% per year above local house price growth until its launch in 2018. We decided to take a look at the difference in office rent in areas along the central section of the new commuter super-line and determine whether rents have grown like the residential market.
The Crossrail line is set to draw attention to areas of London that may have been overlooked in the past. The traditional business sub-districts in London had always been the City, Mayfair and the West End. These newly established hotspots will unquestionably attract investment and regeneration by many property and commercial development businesses. So here’s how office rent has changed in the last year in correlation with the Crossrail developments.
The Crossrail office rent growth map
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At the start of last year, JLL launched their interactive graph revealing five year predictions of exponential house price growth along the 38-station route of the Crossrail. These predictions are not only being played out in the residential property market, but it seems the Crossrail has also influenced office rent in new station locations in a very similar way.
The largest office rent growth in the capital
Typical quoting office rent in Liverpool Street for example were between £48.50 and £60 per ft2 per annum in 2015, this has risen to between £65 and £75 per ft2 p.a. in Q1 of 2016. This equates to a typical increase of 28% since the Crossrail effect was established. Farringdon experienced similar rental growth in the last year, with office rent rising from between £46.50 and £57.50 in Q1 of 2015 to £62.50 – £72.50 per ft2 p.a. this year. Bond Street experienced the third highest growth in office rent of all new London Crossrail stations, increasing from between £65 and £75 per ft2 p.a. to between £82.50 and £100 or more. Which is a typical growth of 25%.
JLL predicted that Whitechapel would experience the largest growth of all new Crossrail stations in the next five years, with a huge 54% increase in housing asking prices. In terms of typical office quoting rents, Whitechapel has grown 18.3% in the last year, which was the fourth highest rental growth out of all 9 London Crossrail locations. Rising from between £35 – £60 per ft2 p.a. in Q1 2015 to between £55 – £69.50 this year. These figures are ahead of growth as Carter Jonas have forecasted average annual quoting rents for premium fitted office space in the City Fringe to grow by only 7% in the next two years.
Tottenham Court Road experienced growth of 12.9% in annual office rent change, which was the lowest in Central London, however, office rents in the area a year ago were already fairly high at between £65 and £75 per ft2 per annum.
Against the JLL predictions, however, Whitechapel has not been the largest growing Crossrail location for the London office rental market. Office rents in Liverpool Street have grown by almost a third, making it the hottest location in the London office rental market. So there are some differences between JLL predictions of the residential market and office rents in relation to Crossrail. However, the general trend that property in close proximity of the Elizabeth Line, whether that is commercial or residential is growing faster than average market growth.
