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News Release

Western Corridor investment volumes rise 58% year-on-year as named demand leaps by 59% and take-up falls 43%

LONDON, 16 April 2014 – Figures released today by JLL show that Western Corridor investment volumes in quarter 1 (Q1) 2014 totalled £229million, an increase of 58% year-on-year, while take-up in the area totalled 369,710 sq ft, a 43% drop compared to the same period in 2013.

Supply in the Western Corridor remained static throughout Q1, with 12.7million sq ft available and a vacancy rate of 14.3%. On a sub-market level, West London supply fell by 5% year-on-year to a total vacancy rate of 8% compared to a 7% rise in the Thames Valley, which reflected a vacancy rate of 21.1%. 

James Finnis, Head of South East Office Agency at JLL said: “The relatively poor Q1 take-up stats mask wider activity in the market.  Named demand stands at just shy of 4m sq ft and many of these tenants are poised to deal in the next couple of quarters.  The development pipeline has delivered a limited pool of high quality buildings and we will see a number of these new developments letting quickly, generating good rental growth.  We have seen PDR transactions with office buildings going to residential – this will help to drain the supply of Grade B space across the wider Western Corridor.

“The West London market continues to suffer a shortage of Grade A space.  Whilst the spec pipeline in West London has 630,000sq ft due to complete during 2014, this will not satisfy current demand and we will continue to see concentrated rental growth in this geography.”

Angus Minford, Director, South East Office Investment at JLL said: “Following an exceptional 2013, when the sales of Chiswick Park and IQ Winnersh dominated activity, the investment market has remained buoyant, with particular focus being on the improving secondary market. Volumes up 58% compared to the same period last year. Activity was heavily boosted by the sale of the prime mixed-use Richmond Riverside to Orchard Street for £64.5million, with a yield of 5.00%.

“Prime yields in the Thames Valley remain at 5.70% with West London moving into 5.50%. Both are trending keener.”

Vicky Heath, Associate Director, UK Offices Research at JLL said: “The market is in good shape for the year ahead and the latest JLL rental growth forecasts show rents increasing by an average of 4.0% per annum over the period 2014-18.   Bracknell and Slough are forecast to see the strongest growth during this period, at 5.8% per annum and 4.6% per annum respectively.  Allowing for the poor Q1, we are forecasting take-up in 2014 at 3.25-3.5m sq ft which exceeds 2013 figure of 3m sq ft.”​