Nice Portland Estates plans to extend the hire at its top-tier workplaces as the owner advantages from demand for smaller house within the centre of the UK capital amongst companies which are attempting to adapt to hybrid working.

In its annual outcomes on Wednesday, the FTSE 250 firm stated it anticipated rental costs to rise between 3 per cent and 6 per cent at its premium workplaces within the coming 12 months.

The outcomes come at a time of stress for the broader industrial property market, which is underneath stress from rising rates of interest in addition to the rise of homeworking.

GPE’s web belongings fell 9.2 per cent over the 12 months to the tip of March to £1.92bn, which the corporate stated mirrored “the worldwide impression of rising rates of interest”. The group swung to a pre-tax lack of £164mn in contrast with a revenue of £166.7mn the earlier 12 months.

The property firm has however been shielded from the worst of the difficulties as firms have downsized their headquarters to smaller workplaces in additional central areas.

GPE, which focuses on top-quality properties in west central London areas comparable to Mayfair and St James’s, signed a file variety of leases in the course of the monetary 12 months price a complete of £56mn — up 44 per cent from the earlier 12 months.

Toby Courtauld, chief govt, stated there was an “excessive” scarcity of top-quality workplaces in such areas, which he anticipated would enable the corporate to extend rents.

Throughout central London, the workplace emptiness charge has risen from 5 per cent in March 2020 to 9.1 per cent this month, in keeping with property information supplier CoStar.

Nonetheless, vacancies differ by space, with charges greater than 10 per cent in areas comparable to Canary Wharf and as little as 3 per cent in some elements of the West Finish.

Courtauld stated the marketplace for very best quality belongings in central areas was “previous the trough”. He added that hybrid working was “clearly right here to remain”.

Greater gross rental earnings pushed income up from £84.2mn within the earlier interval to £91.2mn.

Miranda Cockburn, analyst at Panmure Gordon, stated the divide between top of the range and second-tier workplace house was more and more stark.

“It’s bought to be ticking environmental bins, it’s bought to have good amenities and facilities,” she stated. “If you happen to’ve bought outdated properties that don’t meet these standards, it’s actually troublesome.”

GPE, which additionally has a portfolio of excessive road properties together with on Oxford Road, Bond Road and Regent Road, stated it anticipated to have the ability to enhance hire at its retail belongings as effectively, because of a rebound in journey and an uptick in retailer gross sales because the Covid-19 pandemic.

The group stated it anticipated hire worth progress of as a lot as 5 per cent throughout its retail properties.

GPE maintained a complete 12.6p dividend for the 12 months. Shares had been down 1 per cent by early afternoon on Wednesday, extending a decline prior to now 12 months to greater than 20 per cent.