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News Release

London

South East office take-up hits 805,000 sq ft as investment activity soars 70% in second quarter 2014


London, 21st  July 2014 – Statistics released today by JLL indicate that South East office take up in the second quarter (Q2) of 2014 has reached 435,350 sq ft, bringing the half-year 2014 total to 805,000 sq ft.
 
Take-up was evenly split between the West London and Thames Valley sub-markets, with the services sector particularly active, accounting for 70% of space transacted throughout Q2.
 
Rental growth across the Western Corridor continued during Q2, with the prime average rent increasing 6.0% year-on-year and 1.3% quarter-on-quarter to £30.71.
 
Activity in the investment market increased by 70% in Q2 2014, soaring from £139million in Q1 to £237 million.
 
James Finnis, Head of South East Office Agency at JLL said: “Overall take-up levels for H1 are disappointing and reflect the spaceless growth and push for property efficiency which many corporates are striving to achieve.  However, the continued growth in active, named demand from occupiers with lease events or who are experiencing real growth, points towards a real surge in leasing activity which will come through in the back end of Q3 and in Q4. 
 
“As predicted supply across the Western Corridor fell by 7% year-on-year during Q2, to the lowest level recorded since mid 2009. This is a direct result of office space being converted to alternative uses particularly PDR to residential.  There is growing corporate awareness that Grade A supply is constrained and choice is being eroded.  This should encourage tenants to accelerate their relocation strategy which underlines our view on increased leasing activity in H2.  
 
Angus Minford, Director, South East Office Investment at JLL said: “The volumes for the first half of this year are approximately 15% down on last year. However there has been a significant amount of activity in the marketplace in the intervening period that point to stronger figures for Q3 and beyond. The South East remains an attractive marketplace for a broad spectrum of investors who are prepared to take varying degrees of risk.”
 
Ben Burston, Head of UK Offices Research at JLL said: “Despite the subdued take-up figures in H1 2014, the tight supply of Grade A space has continued to put upward pressure on rents, particularly in West London, where we have witnessed continued growth in Chiswick, Brentford and Ealing. Looking ahead, the strength of employment growth and named demand will underpin further growth over the medium term, with Western Corridor rents expected to rise by around 4% per annum to end 2018.”​