An overview of the commercial property market in Belgravia

Like other districts in the London Borough of Kensington and Chelsea, Belgravia has been a highly sought-after area for homeowners, property investors, and business owners alike. Although the property market in the United Kingdom has been struggling to remain competitive for the past few years, property prices in Belgravia seem to have remained largely unaffected, as the district has topped the lists of most expensive homes in the country (and in the world) for two consecutive years. Residential property in Chester Square, the heart of Belgravia, commands average prices of over £6 million.

Although the area is a very desirable residential location, mixed-use property projects that include commercial space have been in demand for several years, as many shop owners plan to capitalise on the high value of this area.

Because of its long-standing ties with aristocrats, politicians, and artists, Belgravia is a popular location for those who are interested in certain types of commercial property. The Kensington and Chelsea Council lists shop units, artist's studios, and corporate business units as the most in-demand commercial property types in the district. Many townhouses in Belgravia have been redeveloped and turned into upscale shopping units or into business centres, and although the district is considered a non-core commercial property area in the capital, the overall condition of the market is considered to be healthy and with bright prospects for the near future.

The fact that Belgravia enjoys excellent transport links with other parts of the British capital is also a positive factor that encourages business owners to move into the area. Belgravia is served by three underground lines (District, Piccadilly, and Circle lines), which provide direct and quick access to Paddington, Victoria, Heathrow airport, King's Cross, Covent Garden, Westminster, and Liverpool Street, as well as to other areas of Greater London, such as Richmond or Wimbledon. Public buses, taxi boats, and London Overground services complete the transport offer for commercial property owners in Belgravia.

Office space in Belgravia

According to commercial real estate firm Colliers International, Belgravia is among London's top three non-core locations when it comes to commercial property occupancy rates. This is especially the case for office space, whose occupancy rates have been above 95 per cent for the past two years. During the last quarter of 2012, occupancy rates for office space in Belgravia reached 97.5 per cent. These occupancy levels make of Belgravia one of the most in-demand office locations in London, only preceded by districts like the Docklands, Westminster, and Victoria.

During the second quarter of 2012, vacancy rates in Belgravia fell from the previous figure of 5 per cent to 4.7 per cent, much in line with the rest of locations in London's West End. This decline in vacancy rates has been partly fuelled by an increased demand for Grade B or second-hand office space. During the last three months of 2012, the availability of this type of office space in the area fell by an impressive 12 per cent, following the closure of several deals for large business units in the district.

As a result of the above, office space take-up levels in Belgravia are among the highest since the start of the financial crisis, and currently transaction levels seem to be on the rise, following a downward trend experienced during the first 6 months of 2012. During the past year alone, 187,000 square feet of office space were taken-up in Belgravia.

Prime office rental values in Belgravia match the average of London's West End, and are currently in the region of £105 per square foot for offices of 10,000 square feet and above and for long-term leases of up to 10 years. At the lower end of the market, office rental values average £57.50 per square foot. Commercial property market analysts estimate that by the end of 2013, headline rents could rise to £110 or even £120 per square foot. When it comes to property investment values, the prime yields for office space in Belgravia average 4.50%.

Retail space in Belgravia

Elizabeth Street is the main retail artery in Belgravia, and it has recently undergone development in order to increase the availability of retail space and consumer demand. There is also a large number of retail units available in the area closest to Victoria, where shop units range in size from 630 to 2,800 square feet.

According to the Kensington and Chelsea Council, current retail vacancy rates in Belgravia stand at 6 per cent, a figure that is below average when compared to other neighbourhood centres in the borough.

In the future, the retail property market in Belgravia is likely to benefit from the restoration of the historic Grosvenor Gardens House, which will be converted into a mixed-use development with cinemas, a spa, and several restaurants.

Currently, there is no industrial space available in the Belgravia district.