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News Release


City on track for 6million sq ft of take up by year end, investment market strong with rising values drawing assets to market says JLL

London, 30 June 2014 – Statistics released today by JLL show that the City leasing market is on track to hit 6million sq ft up of take up by year end, with 2million sq ft let year to date and a further 2 million currently under offer.

Figures show that the West End market has remained strong throughout the quarter, with a number of deals commanding £100 per sq ft. A rise in demand for West End space has resulted in a shift in focus from King’s Cross to Southbank, due to short supply.

The investment market is strong, with rising values drawing more product to market. Approximately £5.8bn has been transacted year to date with in the region of £1.7 billion under offer.
Value-add investment opportunities continue to see strong competition. Investors are keen to re-develop or refurbish assets in order to deliver new supply to a market they anticipate to be under-supplied in the next couple of years. This competition is driving up values for secondary stock.
Damian Corbett, Head of Central London Capital Markets at JLL said: “After a quiet start to the year the market is now picking up, and we would expect a strong second half of the year with several large assets expected to trade, including the HSBC tower. Strong growth in values is drawing more product to market as vendors seek to capitalise on attractive pricing, and there is a large pool of investors keen to deploy their capital in the expanding London market.
“Interest from overseas investors continues to be a common theme, with Chinese insurance companies particularly strong players at present and keen to secure larger lot sizes.”
Neil Prime, Head of UK Office Agency at JLL said: “The second quarter has seen continued high demand from occupiers, with approximately 5.1million sq ft of named demand currently in the marketplace and in the region of 3.6million sq ft of space under-offer. Importantly, we are seeing a resurgence of demand from the financial sector, with large requirements continuing to come through in the City and higher rents being paid for the best space on the West End.
“Lease events are proving to be a key driver of enquiries, and we are noticing that longer term requirements are starting to think about their options earlier than normal, as the pipeline of deliverable schemes for certain occupiers is limited. 
 “As we predicted last year, occupiers are continuing to move out eastwards. We see evidence of this in upward pressure on rents in Shoreditch and Clerkenwell, which in turn pushes more cost-sensitive occupiers to Aldgate and Whitechapel, supporting further growth in those locations.”
Ben Burston, Head of UK Office Research at JLL said: “While leasing activity has been strong in the first half of the year, the fact that most of the large deals are still being driven by consolidation or lease events, rather than outright expansion, is at odds with surging office employment growth, which is at record levels for London.
“This surge in recruitment suggests that we are approaching a tipping point where rising headcounts, which for many firms can presently be accommodated within existing floorspace, will result in expansion requirements, adding further momentum to rental growth and exposing an acute shortfall in new space, especially in the City.
“In the investment market, while looming base interest rate rises will generate significant attention, the direct impact on borrowing costs will be offset by increasing competition among lenders, which is driving down margins. Coupled with positive momentum from the leasing market, this will support further capital value growth as the year progresses.”​