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Charlie Wade, Director – Tenant Representation
JLL predicts that 2015 is on track to be the most active year for the serviced office industry as more providers flock to London for a piece of the action. Strong occupier demand and low levels of traditional stock have seen headline rents for office space increase across the capital. This is creating an opportunity for the serviced sector to provide a competitive alternative to traditional leases.
Tenants are looking for quick, flexible, office solutions as they scale their business in relatively uncertain times. Keeping upfront capital expenditure to a minimum and limiting the risk and exposure to long term financial commitments is crucial. JLL have never been busier helping occupiers secure this type of space and helping our clients plan a strategy that aligns the real estate portfolio with the business agenda.
The rental band "sweet spot" for take-up and demand sits between £50 to £70 per sq ft, 58% of take up and 56% of the current active requirements in the market are within this band. Add business rates, service charge costs, cap ex on build out, dilapidations and minimum 5 year lease commitments, and you can see why the serviced office model creates a compelling argument for tenants. With the increased demand for this type of product comes an increase in those willing to offer a solution.
The competition in turn keeps prices in check and ever improves the quality of the office space being offered. As the sector goes from strength to strength it will be interesting to watch how the traditional landlords in London react and respond to those disrupting the status quo.
Take a look at our latest report http://www.jll.co.uk/united-kingdom/en-gb/london-markets/market-update
Director – Tenant Representation
+44 (0)207 087 5626