London tops office rental costs table

LONDON is by far the most expensive city in the world for office space, outstripping Tokyo, Paris and New York by hundreds of pounds per square metre. Companies renting offices in the capital can expect to pay an average of £1,728 a square metre a year, once property taxes and service charges are included, against £1,213 in Tokyo and £976 in New York.

The latest figures from property consultant Healey & Baker show that, while rents in London have declined slightly, the gap between the capital and its rivals has increased.

Head of European research David Hutchings said things had looked promising at the start of 2001 but had rapidly gone downhill. 'The decline in the telecoms and hi-tech sectors gave us early warning that the record level of growth and activity seen in 2000 were not going to be bettered but as the year progressed, conditions became markedly tougher,' he said.

'There are clearly going to be further areas of weakness in the months ahead but there now some more hopeful signs. If the economy picks up steadily later this year, as we expect, a return to balance should be evident in 2003.'

Across Europe, average vacancy rates rose from 3.75% to 5.4% and rents grew by 1.5% against 15% the previous year. In America, lots of offices became available as telecoms, media and internet companies went bust.

The New York market was feeling the pinch before 11 September terrorist attacks, which sparked a short-lived flurry of activity as companies whose offices were damaged had to find space elsewhere.