Occupiers overcharged by millions for London office space, say commercial estate agents DeVono

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Commercial estate agents DeVono claim tenants are overpaying for London office space. The company, which specialises in commercial property in central London, says businesses are regularly overcharged by an average of 24% on London office space rent.

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Until occupiers are empowered to negotiate better terms, London offices will remain needlessly over-expensive

Award-winning commercial estate agents DeVono have warned that office occupiers in London could be overpaying on rent – after negotiating £7m of savings for clients in the first quarter of 2013 alone.

On average, occupiers are being overcharged by 24% for central London office space, according to Adam Landau, director of DeVono.

He says commercial property agents acting for landlords are using ‘comparable evidence’ to unfairly drive up rents for London offices in core city areas.

Comparable evidence allows estate agents to calculate lease values based on the terms agreed for nearby equivalent office spaces. If one occupier gets overcharged on London office space, landlords can use comparable evidence of their terms to inflate costs for surrounding offices.

London offices are amongst the most sought-after in the world. In February, the UK capital once again became the most expensive city in the world for office rents.

DeVono, the first commercial property agent to work exclusively on behalf of London office occupiers, says whilst businesses are able to negotiate improved terms, a lack of detailed market knowledge about office values and cost reductions means they often miss out on all the available savings.

Adam Landau explains: “Landlords obviously want office occupiers to pay the highest rent possible, but this isn’t in the occupier’s interest. There is no doubt that occupiers know how to negotiate, but they are not generally aware of all the different areas where savings can be made outside of the rental levels.

“We have years of commercial property expertise and in-depth knowledge of the London office market, so we can help negotiate fair rents, savings and incentives. In many cases, this results in £100,000s of savings.”

From the 11 DeVono clients who saved a total of £7m on office costs in the first quarter of 2013, two benefited from a reduction of more than £1.5m on their London office space terms.

Adam Landau said savings of more than £1.5m on a single office agreement proved in-depth market knowledge and experience were vital for getting the best possible terms for London office space.

Adam said: “If a business can’t negotiate a fair price, and landlords get away with over-charging, then commercial property for rent in the surrounding area gets more expensive too.

“If one occupier overpays, landlords gain ‘comparable evidence’ to justify higher office rents in surrounding buildings. Until occupiers are empowered to negotiate better terms, London offices will remain needlessly over-expensive.”

Adam added: “We’d suggest anyone looking for London office space speaks to a commercial property agent that focusses on occupiers - and uses the agents’ knowledge to obtain the most occupier-friendly terms.”

DeVono produces a London Office Market Rent Guide every quarter, featuring the average quoting rents across central London areas such as the West End, the City and City Fringe, South of the River, West London and Canary Wharf. The Guide includes office costs for Marylebone, Mayfair, Knightsbridge, Tech City, the West End, Canary Wharf, Covent Garden, Camden, Noho, Soho, Euston, Notting Hill, Kensington, Hammersmith, Shoreditch and the Bank.

For Quarter Two 2013, premium Mayfair offices will command between £70 and £110 per sq ft per annum, with more basic commercial properties in the area costing around £40 to £55 per sq ft. The cheapest central London offices are basic properties in Canary Wharf and Camden, at around £15 to £25 per sq ft in Canary Wharf, and £15 to £20 in Camden.

The highest price ever achieved for London office space is £145 per square foot, in St James’ Square, SW1.

DeVono offers an exclusive London office space calculator on its website, alongside the most recent Market Rent Guide and plenty of useful information about London office space and DeVono’s commercial property services. Visit http://www.devono.com to find out more.

ENDS

Notes to editors

For more information, contact Kirsty MacGregor at DeVono, on +44(0)207 096 9911 or email info(at)devono(dot)com.

About DeVono
DeVono are award-winning commercial estate agents in London, who act exclusively on behalf of occupiers and tenants. The company does not act for commercial property landlords, as this creates a conflict of interest. Since 2003, DeVono have helped to find prime London office space for clients, and negotiate the best possible terms and savings.

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Kirsty MacGregor
DeVono
+44 (0)207 0969911
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