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News Release

LONDON

Central London take-up on track to exceed 11 million sq ft, while investment volumes likely to top £15 billion for third year in a row says JLL


LONDON, 29 September 2014 – Data released today by JLL points to an active second half of the year for the Central London office market, with leasing figures set to top those reached in 2013.


The leasing market continues to see strong take-up, with City lettings showing potential to reach over 7 million sq ft for the second year in a row and the West End on track for 3.3 million sq ft by the close of 2014.  Strong take-up in these markets, combined with a resurgence in the Docklands, will see Central London take-up figures on track to exceed last year’s total of 11million sq ft.


The investment market is also likely to see a surge of activity in Q4, with several large buildings currently on the market. Investment volumes currently stand at £9.8 billion, but by the end of the year turnover is expected to grow to over £15 billion. 


Neil Prime, head of Office Agency at JLL said: “Market activity is buoyant and with 2.3 million sq ft currently under offer in the City alone and we’re expecting a wave of activity before the year draws to a close.


“Pre-let activity has remained strong throughout the year and as a result the speculative development pipeline is looking increasingly thin as we move into next year.


“Consolidation and lease expiries have been the key drivers of the market but over coming months we expect to see the return of growth demand. This will see occupiers expanding and as such bringing new requirements to the market. Amazon’s recent decision to take a 400,000 sq ft pre-let at Principal Place is an early example of this and we expect to see more occupiers following suit.”


Damian Corbett, head of Central London Capital Markets at JLL said: “Early in the year, turnover was subdued due to reluctance to sell on the part of many investors. Now the market playing is ‘catch-up’ and with more stock available we expect to see a very busy Q4.


“Yields have continued to tighten, particularly in the City where prime yields on smaller lots are now down to 4.25%. Investors are also attracted to value-add and development opportunities in fringe areas, with the result being that yields in these areas are tightening relative to the core market. Overseas investment continues to be a key trend, with Taiwanese investors particularly active at present.”


Ben Burston, head of UK Offices Research at JLL said: “Buoyant GDP growth, rapid employment growth and the continued out-performance of London’s economy are supporting strong levels of leasing and investment activity across the Central London market.

"Unlike some other global markets where there is a disconnect between the strength of investor demand and leasing activity, our latest figures indicate that the London market is aligned with investor demand, underpinned by strong levels of take-up.

“The fact that growth demand is still to return to previous highs despite the current strength of employment bodes well for continued strong leasing activity into next year, but it will become increasingly difficult for occupiers to secure their desired space given a lack of new supply.”