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News Release

London

Western Corridor Office Market enters 2009 with resilience

According to Jones Lang LaSalle’s Spring Western Corridor Report


London, 17th February 2009 – The Western Corridor saw the highest volume of take-up since 2001 with over 3 million sq ft let; an increase of 17% on 2007 according to Jones Lang LaSalle’s newly published Spring 2009 Western Corridor Report.  

James Finnis, head of the South East Disposals team at Jones Lang LaSalle said: “The two markets within the Western Corridor told different stories during 2008.  Take-up was supported by a particularly strong year in the Thames Valley.  In this market, volumes increased almost 60% year-on-year to 2.1 million sq ft, driven by significant pre-letting activity.”
 
James continued; “In contrast, the West London market saw a marked slowdown in activity.  Take-up was at its lowest level since 2004 and down 24% in comparison with 2007.  The second half of the year was particularly slow with only 394,000 sq ft let; (39% less than H1 2008).   This slowdown can be attributed to economic conditions impacting occupier demand as well as knock-on effect from the negative sentiment in the West End market.”

As companies manage falling head count in 2009, demand will fall further and although there has been an upturn in the number of viewings, many will not translate into deals.  This combined with a continued pattern of increasing supply and general negative sentiment will result in much tougher market conditions this year.

James added; “Any deals that transact in 2009 will be competitive but we expect a number of exceptional deals as financial pressures on landlords with high gearing force rental cuts and increased incentives. These tenant favourable deals may encourage occupiers to take advantage of market conditions. They will be driven by lease events, however, not simply a desire to cut costs as the high capex of relocation will limit demand. Consequently, we anticipate 2009 will be characterised by smaller opportunistic deals rather than pre-lets.”

Guy Parkes, head of Jones Lang LaSalle’s Western Corridor Office, concludes; “The region will continue to be characterised by take-up from a diverse international tenant base.  Although all sectors will be affected, this diversity may offer some defiance against the consequence of the economic downturn.   Analysis released by the Local Government Association (LGA) suggested that sectors which are active in the Western Corridor, such as IT, Telecoms, R&D and Business Services, were some of the least vulnerable to recession.”