The “flight to quality” that has benefited Manhattan's prime real estate owners is also evident in London, the market most associated with New York.
Vacancy rates are plummeting in London's most popular submarkets, particularly in modern office towers, according to Knight Frank, one of the UK's leading property management and lettings companies. Anyone involved in the New York real estate industry has heard this all too often.
Vacancy rates for London's new towers, which feature a “best-in-class tenant experience” and “certified sustainability”, have fallen to just 0.3% in the West End and 0.5% in the City of London.
Nowhere in the entire Manhattan region has lower vacancy rates, but the newest towers here (larger than London) are nearly full.
Among London's biggest recent deals is British Land's 250,000 sq ft Citadel property at 2 Finsbury Avenue, currently under construction and expected to be completed in 2027. The lease will expand Citadel's area in the city by two-thirds.
Ken Griffin's company is leading rapid growth in financial services and, like New York, appears to be immune to market fluctuations. Citadel is the anchor tenant at the new 425 Park Avenue location. Even as Griffin plans to build a new tower at 350 Park Avenue, it is also negotiating a huge lease at 660 Fifth Avenue.
Mr Knight Frank said hedge funds, private equity tenants, merchant banks and wealth and wealth management firms had steadily established a presence in the UK capital “despite macro, political and economic headwinds”. He pointed out that it was increasing.
