Office rents in London's Paddington have increased by nearly 70 per cent since 2010, with average grade A rents rising from £36.99 per sq ft to £62 per sq ft, reflecting an increase in the quality of office stock in the area.  

Long overshadowed by other central London locations, Paddington has changed significantly in recent years and with further development underway is finally coming of age as a major office hub.

The arrival of Crossrail at the end of 2018 will boost Paddington’s transport links: the station is expected to become one of the capital’s major transport hubs with direct fast links to Heathrow, the West End, the City and Canary Wharf. In anticipation of this businesses have been moving in, relocating from more established, and more expensive, London office locations.

Rents north of £80 per sq ft have been achieved on the best new space but overall we see prime rents in Paddington sitting at £65-70 per sq ft and average grade A at £60-63 per sq ft, suggesting that the market continues to appear competitive against other core and sub-markets in London (see table, below) and attractive to cost-conscious occupiers. Furthermore, Paddington is one of the very few areas in London to have seen a drop in the average rateable value in the 2017 revaluation, seeing a 4.6 per cent decrease, making it 25 per cent cheaper than the likes of Victoria and King's Cross.

The landscape is changing and this is attracting big name occupiers, which is in turn attracting more attention. 20 Eastbourne Terrace, next to Paddington station, has been transformed from a tired 1950s block into the office address of The Office Group, Coty and Citrix. British Land has invested significantly in developing the public realm and amenity provision at Paddington Central. Its latest office building at 4 Kingdom Street leased quickly and to strong names.

Elsewhere, Derwent London is onsite with a new 243,000 sq ft office scheme at the Brunel Building, expected to complete in 2019, with a 77,000 sq ft pre-let already agreed to Sony.

Paddington Square will transform the area immediately around Paddington station with a new retail and leisure offer and public realm, complementing the redevelopment of the canal sides of Paddington Basin, which is also host to new restaurants, bars and boutiques.

As new developments reach fruition, secure tenants and leisure and retail operators follow suit, Paddington is emerging as a vibrant sub-market where businesses want to locate, not just travel through. With further potential sites which may also be developed, Paddington has a bright future in the context of central London.

Despite rising rents, there continues to be an opportunity to find value and landlords that can refurbish offices to offer attractive grade A space and deliver it to the market quickly should consider options.

Further information

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