Relocation, relocation, relocation
London is once again open for business, seeing a rise in demand for properties for corporate tenants. We take a look at how corporate relocation works and why corporate tenants are an appealing proposition.
13 October, 2022
The market for corporate rentals in London has never been more competitive, says KFH lettings director for central London, Duncan Blakelock. He says that following the Covid lockdowns, which largely closed down the corporate rentals market, the sector is now booming again. “Our corporate relocation division has seen a huge peak and is currently up 40% year-on-year,” he adds. “The activity in this sector is very strong and the competition is fierce. But due to a lack of stock, we are getting a lot of searches coming back four or five times because they are struggling to find what their clients want – so that’s the challenge, a lack of stock.”
With lockdowns (hopefully) a thing of the past, people are returning to their offices, and companies are able to attract international candidates who can now move to the UK for office-based roles. “That’s why demand for corporate relocation properties is ramping up so fast,” Blakelock says.
“Organisations want their valuable and/or senior staff to be working face to face.” This has created huge demand for corporate relocation services, similar in many ways to the post- Covid spike in demand that created booms in the property sales market. To a degree the surge in demand for corporate relocations is due to the varied range of people and companies involved.
These include affluent graduates, C-suite executives and other seniors, civil servants and NHS staff, high-flying artistic creatives such as theatre and film stars, as well as some other more surprising categories.
“Since the tech revolution and London’s increasing role as a hub for companies such as Google, Meta and a plethora of lesser-known technology giants, we’ve also seen more and more requests to help find accommodation for ‘techies’,” says Sherard James, KFH’s head of corporate services. “These can be relatively junior people in organisational terms but because they possess in-demand skills and are paid well, also need help finding somewhere to live in London when they’re brought over to work in the Capital.
“Traditionally, demand was always prime central London high-end houses and large apartments for executives, but that’s been changing. Consequently, our Clerkenwell office does a roaring trade in corporate lets for this kind of market because the area has so many tech companies based around the famous ‘silicon roundabout’.”
Traditionally, demand was always prime central London high-end houses and large apartments for executives, but that’s been changing.
What’s the average rent?
The average corporate spend is around £560 a week for a one or two bedroom apartment, between £600 and £700 for a three bedroom and then anything with four bedrooms or more is between £800 and £1,000 – rising to much more for the upmarket properties in prime central London. And then there’s the market for high rollers such as Hollywood actors and film directors, who can have budgets of £10,000 to £20,000 a week. “We get asked to search for that kind of property three or four times a month and it’s hugely exciting when you land one,” says James.
“The main challenge is that these kinds of properties are relatively scarce now compared to before Covid. Nevertheless, we had a property in Marylebone recently that we found for a very high-end executive, which was £10,000 a week and they wanted a long-term tenancy, which is unusual. “It took time. We spent four months searching for them. I don’t get excited about these kinds of deals until they have the keys, but it's very rewarding once it's all done and dusted. “Our average term had been 23 months, but that has risen to 25 months recently because many clients want to lock everything down ahead of a potential recession or increase in rents driven by inflation,” he adds.
UK and international companies looking to move staff to their London operations rely on a variety of different ways to accommodate them. Some come direct to KFH via their HR departments, while others use the small army of relocation experts who work in the Capital to source appropriate accommodation. These in turn use retained and trusted estate agencies like KFH, which search their database of properties and liaise with their branch network to find suitable dwellings.
“Relocation agents offer a full package – goods storage, property search, setting up all the utility bills and so on, so all the person needs to do is arrive with their luggage – it’s a VIP treatment scenario,” says Sherard James. “Relocation agents use KFH to source the properties – it’s how a significant majority of this market works.”
Our average term had been 23 months, but that has risen to 25 months recently because many clients want to lock everything down ahead of a potential recession or increase in rents driven by inflation.
But that’s not the only property search work that KFH competes for. “We work with large London-based organisations like the NHS, Transport for London and others looking to move staff within the Capital, and we also have an international desk that deals largely with Chinese students arriving in the UK looking for a corporate relocation-style service,” says James.
Landlords are usually keen on ‘corporate lets’ because companies often pay a premium to secure a property that meets their requirements, for example close to the office, and landlords have the choice of short or longer-term rentals. Also, landlords like the professional tenants involved because, usually, they tend to take extra care with the property as they are representing their employer.
A few years ago Fergus Ryan, who at the time was KFH’s Clerkenwell lettings branch director, found that corporate tenants tended to create less wear and tear on properties, largely because their employer provides such good facilities at their offices. “We had a corporate tenant move out after 18 months in the property. Afterwards, we noticed that the manual was still in plastic, sitting in the brand new oven,” he says.
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