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News Release


Supply of Grade A space in the Western Corridor falls to its lowest level since 2008

Driven largely by constrained development activity and take up from the Manufacturing and Service sectors, say Jones Lang LaSalle in latest research report

London, 21st September 2011 – According to new research by Jones Lang LaSalle, Grade A supply in the Western Corridor office market fell to its lowest level since 2008, reflecting a vacancy rate of 5.9%. An increased shortage of Grade A space has fuelled prime rental growth, particularly within West London, but further growth is forecast in town centre locations where demand has been focused.

Looking ahead, there is a compelling case for speculative development in a number of core town centre locations which have limited Grade A supply. Occupiers will continue to consider well-located Grade A space which has accounted for 60% of take-up volumes over the past 12 months, with West London and M4 corridor locations such as Reading town centre, Maidenhead town centre, Uxbridge, Staines and Egham all standing out as development hot spots.

James Finnis, Head of South East Office Agency said: “Over the next 12/24 months, the refurbishment window of opportunity to convert Grade B space to Grade A is open as take up reduces the supply of this best space.  We are forecasting a pinch point in 2012 where, assuming current levels of demand, rents will increase markedly for the best space in areas of limited supply.”

Investment activity picked up over the first half of 2011 with £805 million traded.  Volumes were in line with five year average levels boosted by the sale of Chiswick Park by Blackstone for £480 million. There is persistent strong demand from investors and London and the South East remain favoured locations but limited supply continues to hamper investment activity in the region.  

Mark Wilson, Director National Office Investment commented that: “With the yield gap between Central London and rest of the UK expected to remain favourable, we expect further activity from overseas investors in the Western Corridor over the next 12 months.”

Prime yields stabilised at 6.50% in both the Thames Valley and West London although in some instances these may tighten further. 

Angus Minford, Director Capital Markets added: “We expect these to remain relatively stable over 2012, although prime town centre stock may see further compression as competition for prime assets intensifies.”