Canary Wharf rent rising at fastest rate in the capital, Knight Frank says

Office rent is historically cheap further east

Office rent in London is growing at one of the fastest rates in the world (Getty)

Canary Wharf rent is rising faster than anywhere else in London, according to Knight Frank.

The estate agent said that office rent in Canary Wharf will increase 12.8 per cent in 2106 after rival Shoreditch saw rent hike 24 per cent in 2015 thanks to London's growing technology sector.

Shoreditch rent is forecast to grow 10 per cent in 2016, with midtown not far behind at 9.6 per cent.

(Knight Frank)

That makes Canary Wharf look affordable to some businesses that are finding a shortage of available offices elsewhere in the capital.

Office rent is historically cheap further east. But Sheikh Abdullah bin Mohammed al-Thani, the chief executive of Qatar's sovereign wealth fund that now controls Canary Wharf, has pledged to build more homes and offices in the area.

The development of Crossrail next year will serve to integrate Canary Wharf with the rest of Central London, making offices there more accessible.

“Crossrail will make Canary sing. Pay £40 per square foot and be just 18 minutes from Mayfair, or pay £100 per square foot extra to be two minutes from Mayfair? The Wharf will be the new West End," said Bruce Dear, head of London real estate at law firm Eversheds.

Knight Frank said technology companies that started in Shoreditch may also head east to Canary Wharf in search of more space.

(Knight Frank)

Shoreditch rent at £65.00 per sq ft is not far from the £70 per sq ft paid by central London businesses. In 2007, Shoreditch was around £20 per sq ft cheaper than the centre of London.

"Everyone assumed the tech firms could not afford rents that high. However, the more successful start-ups from five or six years ago have matured into larger, established companies with deeper pockets," said James Roberts, chief economist of Knight Frank.

Office rent in London is growing at one of the fastest rates in the world, behind only Beijing, Melbourne, Sydney and San Francisco, where Silicon Valley has shown comparable rent growth to Shoreditch but over the course of several decades.