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LONDON, 18 September 2014 – JLL’s annual West London and Thames Valley seminar, which took place this morning, revealed a bright future for the South East offices market, hinting at high levels of occupier demand, a strong performance from business parks and a raft of new entrants to the investment market.
James Finnis, head of South East office agency at JLL said: “Whilst take-up levels in the year to date have been disappointing, the pool of named tenant demand continues to grow and now stands at just under 5 m sq ft.
“We are forecasting that the exceptionally high level of demand will overflow into deals in Q4 this year and into 2015, which will lead to a sizeable increase in take-up. Occupiers want the best space, so the new stock being delivered through redevelopment or refurbishment will be targeted.
“This take-up, coupled with the impact of Permitted Development Rights to Residential, will see the limited pool of supply reduce. Even in a low take-up environment, rents have continued to grow, driven by activity in West London, but the growth is now permeating the wider region. JLL is forecasting that prime Grade A rents will average £40 psf by 2017, as the Western Corridor occupational market sees the growth anticipated for a number of years.”
Angus Minford, Director, Capital Markets at JLL said: “The level of interest in the western corridor market is truly global. We are predicting a raft of further entrants to the market as its unique value proposition compared to other office geographies becomes more pronounced.
“With record high occupational demand and rental growth becoming more widespread into 2015, we forecast yields to move into 5.00%”
Ben Burston, head of UK offices research at JLL said: “The South East continues to benefit from solid economic growth and a rapid expansion in employment, and this underpins our strong outlook for West London and the Thames Valley in 2015 and beyond.
“The market will be further buoyed by substantial investment in infrastructure over coming years, including the redevelopment of Reading station, M4 congestion measures and Western rail access to Heathrow and Crossrail. The cumulative effect of these measures will be to reinforce to occupiers the importance and attractiveness of these vital office markets.”
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