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News Release

London

Heathrow buoys up the Western Corridor Industrial market

According to Jones Lang LaSalle’s H1 2009 research


London, 11th August 2009 – Jones Lang LaSalle has released its Western Corridor industrial leasing market headlines for H1 2009 which show that once again the Western Corridor industrial real estate market has confounded expectations by delivering an overall increase in take up.

The research shows that industrial/warehouse leasing transactions have been concentrated around Heathrow, with almost 550,000 sq ft let in the first six months of the year, ending a run of 18 quiet months.  1.2 million sq ft was let in West London in H1 2009; up 14% on the previous half year and 44% higher than the first half of 2008.  However, in the Thames Valley, there has been a notable fall in take-up with just 480,000 sq ft let, reflecting a fall of 48% with the equivalent period last year.  Overall, take-up in the Western Corridor region stood at 1.71 million sq ft at the end of the H1 2009; a 20% increase compared to H1 2008.

Jody Smith, associate director in Jones Lang LaSalle’s National Industrial & Logistics team, said: “Our research shows that Heathrow, which has been uncharacteristically quiet since the end of 2007, has been the most active leasing market  in the first half of 2009. Whilst take-up activity in the Thames Valley has significantly reduced over the same period, largely caused by the absence of the data centre transactions which had boosted figures in recent years.”

Jones Lang LaSalle’s research shows that headline rents have remained relatively stable in all the core markets but there have been falls in net effective rents as landlords have agreed to generous incentives in order to secure deals.  There has however been a substantial increase in industrial space available across the region this year; around one million sq ft has been added to supply in West London and a similar volume in the Thames Valley. As a result the vacancy rates have climbed to 8.3% in West London and 9% in the Thames Valley.

Jody Smith added: “The increase in supply has been caused by the return of space to the market by tenants rather than completion of development stock. There is very little development space remaining under construction and no speculative starts are planned.”

He concluded: “Looking forward, we forecast that the second half of this year will remain challenging but take-up will continue to be buoyed by occupiers recognising that they have a fantastic opportunity to relocate to a more modern and efficient building, without an increase of rent, due to the generous incentives currently being offered by landlords.”

Notes to Editors:

Jones Lang LaSalle’s Western Corridor Industrial and Warehouse Market Report gives a full analysis and interpretation of market activity and will be available in September 2009.