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News Release

London

Jones Lang LaSalle publishes Autumn 2009 Western Corridor Office Market Report


London, 14th September 2009 – Jones Lang LaSalle has published its Autumn Western Corridor Office Market Report
 
Commenting on the report’s findings, James Finnis, head of South East Office Disposals at Jones Lang LaSalle said: “The effects of the recession are becoming increasingly evident in the Western Corridor and will continue to have a negative impact on take-up volumes by dampening occupier activity, which will manifest in two ways.  Firstly, to avoid capital expenditure more occupiers will renew leases or choose not to exercise breaks – there are numerous examples in the current market.  Secondly, occupiers with requirements will continue to be hesitant about committing to space.  Corporate inertia will continue to be a challenge to the market over the next six months and subdue market activity.”
 
James continued: “Corporates are close to reaching the bottom of the cost cutting curve.  This will put more occupiers in a position to take advantage of market conditions, resulting in recovery to the market.  We are forecasting a lack of Grade A supply at the end of 2010 and into 2011 – this will result in a growing number of pre-lets and potentially a sharp return to rental growth."
 
The report also highlights that sector specific activity will be driven by Manufacturing and Services.  Within the Manufacturing sector, the pharmaceutical industry, in particular, has been less impacted by the economic downturn and continues to seek new space.  In addition, there is much consolidation activity in this sector driven by corporate mergers and acquisitions.  In the short term the larger deals in the market will be derived primarily from this type of activity. Within the Service sector, the more cautious approach to property that IT/Telecom occupiers have taken since the dot.com boom coupled with their more efficient use of work space means that these tenants will remain active. 
 
In addition, we also anticipate that serviced office operators will generate an increased number of deals.  This sector is seeing growth, benefitting from current occupier caution and unwillingness to commit to longer term conventional space.
 
James concluded: “Over the coming years as attracting and retaining skills moves again to the top of the location decision making, the need to improve space will become paramount.”