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News Release

London

Advertising agencies face being squeezed out of Soho, London

According to research from Jones Lang LaSalle


London, 2nd April 2009 –According to new research from Jones Lang LaSalle, Soho's long-standing reputation as the hub of the UK advertising industry could soon be a thing of the past as agencies are priced out of their long-established home.  Jones Lang LaSalle’s Moving Medialand? research examines the effect of historically rising real estate costs in Soho and Noho (the area north of Oxford Street) and flags the medium term trends impacting the sector.

Jones Lang LaSalle’s identified trends for the sector are as follows:

1) Short term squeezing of margins resulting in a balance between salary reduction, property cost reduction or headcount loss.

2) Potential for consolidation of non-conflicting group members into a single building.

3) The need to create and work in a vibrant space but at a lower cost and, if necessary, lower quality.

4) The ability to remain in Soho and Noho rather than relocating to lower cost locations.

5) The ability to make real estate decisions in a time of excellent property opportunities, but highly restricted capital expenditure.

George Roberts, head of West End Agency at Jones Lang LaSalle, said: “" Despite the recent falls in rental levels, property costs still present a significant challenge to those charged with administering the finances of both the larger and smaller agencies.  Falling advertising revenue and an increased desire to drive down costs will keep property costs firmly in the sights of finance directors.

George continued; “Whilst Soho and Noho remain at present the locations of choice for agencies, the drive to reduce costs will see agencies review the merits of co-location. A combination of a lack of choice of larger offices to service the larger requirements added to the lower costs of "the villages" outside of Soho and Noho will loosen the bond between media land and its traditional home.”

Stephanie McMahon, associate director of UK Research at Jones Lang LaSalle concluded: "Our view is that creativity will surpass pragmatism until the property cost threshold is breached, resulting in those who need to make a move to consider cutting costs through co-location, space reduction, lower quality stock or moving to other parts of the West. End.”