Office rents in London are falling twice as fast as its main international rival, New York, according to NB Real Estate.

Rents in London fell on average by -24% last year (£83.27 sq ft to £63.28 sq ft), while rents in New York declined by around -12% ($86 sq ft to $76 sq ft) by the close of 2008. According to NB Real Estate, in some areas of Manhattan office rents are still rising. John Brod, principal of PBS Real Estate in New York, adds: “However, in some of the prime office locations in Manhattan, rents are down as much as -30%. We have a lot of subletting taking place so we could see vacancy rates go as high as 12% this year.”

According to NB Real Estate, the rapid growth of London as an international financial centre over the past decade resulted in much faster expansion in financial services employment and office rents in the UK capital than New York. As the financial crisis hit both cities, office rents in London have fallen from a much higher peak.

NB Real Estate said that about 33.5% London’s workforce is employed in financial services compared to around 25% in New York. As financial institutions have shed jobs, the impact of the credit crisis on the London office market has been particularly severe as a result.

James Crisp, director at NB Real Estate, said: “ London is shedding jobs in finance at a faster rate than New York, so inevitably demand for office space in London is falling much more rapidly than Manhattan. It is often the case with markets that the faster they rise the harder they fall. At the moment London appears to be obedient to that maxim, but that could also mean the recovery in London will be equally swift.

“ London and New York are seen as the best quality commercial property markets in the world. Cash rich investors are watching closely from the sidelines. As we reach the valuation floor on assets, they will start to accumulate commercial property.”