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News Release


JLL predicts 13million sq ft shortfall of Central London office stock by 2018 and global investment volumes exceeding $1trillion by 2020

LONDON, 14 October 2014 – JLL’s annual Central London Offices Seminar, which took place this morning, advised that occupiers will face a 13million sq ft shortfall in Central London office stock by 2018 as a result of forecasted growth in population and employment figures.

JLL predicts this shortfall will fuel the growth of areas outside Central London, with a continued focus on Clerkenwell and Shoreditch, further expansion east around the Olympic Park and community clusters developing in east London areas such as Dalston, Mile End and Hackney Wick. Expansion will then spread to Elephant & Castle, Croydon and Cricklewood.

In the investment market, JLL predicts global volumes will exceed $1trillion by 2020, with resurgent Japanese interest joining the strong base of Chinese, Singaporean, North American and UK investors.

Neil Prime, head of UK office agency at JLL said: “The economic outlook for London is positive, with approximately 270,000 office jobs to be created in the next five years and as a result we expect to see a return of expansion-led demand.

“We’re predicting that while 23million sq ft of space will be required by 2018, only 10million sq ft is set to come to market. This leaves a huge opportunity for developers to fill this gap, particularly given the resurgence in pre-lets, and this shortfall will continue to fuel interest from occupiers in areas beyond the core, as we predicted last year, with north and east locations seeing a surge in leasing activity.”

Andrew Hawkins, director, City investment at JLL said: “Real estate investment markets have now returned to the levels last seen in the highly leveraged market of 2007 and as such we are predicting turnover to increase by 30% in the next five years, resulting in 2020 global transaction volumes exceeding $1trillion.

“London, as perhaps the globe’s most ‘open’ city, has been the greatest beneficiary of these increased capital flows, taking top spot as the largest recipient of cross border investment during the first half of 2014. Looking forward, provided we have no major geo-political or economic shocks, there will be no let-up in global demand for London, with new entrants arriving all the time. We expect non-core areas to become firmly institutionalised, attracting both UK and overseas capital, as investors realise these markets are here to stay.”

Ben Burston, head of UK offices research at JLL said: “The London office market has considerable momentum at present, buoyed by London’s inexorable rise as a global city. Leasing and investment activity is very strong and capital values have increased due to both rental growth and yield compression.

“Looking ahead to 2015 and beyond, while there will always be risks, the base case economic outlook for London is for continued strong growth, and as a consequence we believe that the current growth phase in the market has much further to run. In the core, this will mean further rental growth, as supply cannot keep pace with demand, and it will also see the market spill over to new locations beyond the core. Meanwhile, the capital market will continue to be buoyed by the momentum in the occupier market which will outweigh any base rate increases in the near term.”