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News Release

London

Western Corridor office take-up above five year average as supply drops by over 25% says JLL


London, 1 February 2016 – Data released today by JLL highlights that supply in the Western Corridor has dramatically fallen, with the Grade A vacancy rate across the market now at 4.9%, dropping 25% from 11.6million sq ft to approx. 8million sq ft.

 

Annual Western Corridor office take up hit 2,245,000 sq ft by the end of 2015, slightly above the five year average of 2,205,000 sq ft.

The West London market saw 282,500 sq ft transacted in Q4 including the quarter's two largest transactions: Service Now taking almost 59,000 sq ft in the Strata Building and Staines and MSC Cruise Management acquiring 5 Roundwood 46,500 sq ft in Stockley Park for owner occupation. In comparison, 262,300 sq ft transacted across the Thames Valley.

The Services sector was the most active during the quarter with 177,100 sq ft transacted. Services, TMT and Manufacturing sectors accounted for 80% of all Western Corridor take up over the year, totalling 1.7 million sq ft.

Supply of available office space, which has dropped to approx. 8m sq ft during the year, has occurred due to a combination of factors on both sides of the supply and demand balance.  Office stock has been deployed to alternative uses, particularly PDR to residential, which has aggressively grown in the wider South East market.

The development pipeline is responding and will deliver a further 2.7m sq ft of stock through 2016 and 2017.

Grade A vacancy rates in the Thames Valley stand at 7.3%, while West London is 2.8%.

James Finnis, head of South East Office Agency at JLL said: "We saw a number of major transactions carry over from 2015 into 2016 and we anticipate that these deals will complete in Q1, getting 2016 off to a very good start.  JLL is currently advising occupiers on over 1million sq ft of projects, up to half of which are expected to transact in the next few months.

"Higher levels of take-up and demand combined with tight supply, points to sustained rental growth for the remainder of the year.  We have seen solid rental growth across the Western Corridor in 2015 and we are forecasting that this will continue in 2016.

"Consolidation was a key reason for relocation and take up in 2015 and we expect this trend to continue in 2016 with occupiers often taking the best, most efficient space – but in net terms a reduction in total sq ft occupied. 

"As occupancy costs continue to rise in Central London, we expect price sensitive occupiers to seek to address this by building or increasing their presence in the wider South East region, where major new stock is being delivered at substantially lower occupational costs."