When UBS agreed to rent a new headquarters in London five years ago, the U.K. economy was struggling to emerge from a recession and the financial district’s banks were firing workers following the global credit crisis. As the bank’s building nears completion, its timing looks shrewd.
Bloomberg News reports that UBS secured a rent of $82.44 a square foot in the City of London financial district’s biggest leasing agreement since 2002. Since then, a rebounding financial industry has collided with a dearth of new offices, pushing average rents up to about $12 a square foot more than UBS will pay. Broker CBRE Group forecasts an increase of 12% this year.
Demand for offices in the City is expected to outstrip supply for the next several years because construction plummeted after the financial crisis, creating a shortage of space coming onto the market today, according to Deloitte Real Estate.
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