Skip Ribbon Commands
Skip to main content

News Release


Jones Lang LaSalle predicts outlook for UK economy and West Midlands Property Market

At firm’s Birmingham breakfast seminar held today

Birmingham, 7th June 2011 - Jones Lang LaSalle held the second in its programme of property seminars at The Hotel du Vin in Birmingham today.  Attended by over 75 guests, five speakers from the firm outlined the prospects for the UK economy and the commercial property market in the West Midlands.

Speaking about the UK economy, Grant Fitzner, Head of Jones Lang LaSalle’s EMEA Research, said: “The UK has experienced a relatively weak economic recovery over the past 18 months. Recent data has been mixed, showing strong industrial production, an improving trade balance and reasonably resilient business surveys and labour markets. Offsetting that has been a weak construction sector, public spending cuts and negative consumer sentiment.”

Grant continued: “A robust Quarter 2 GDP figure (due to be published 26 July) would help restore confidence in the recovery story and raise the probability of an August interest rate increase by the Bank of England; a disappointing figure could delay the start of the tightening cycle to November.”

Giving his views on the residential property sector Michael Brough, partner, Residential, said: "Certainly the Midlands is set for a tough year in the housing market according to our latest Residential Price Forecasts, alongside the northern regions where prices are expected to fall by an average of 3-4%. This is set against the backdrop of the UK as a whole where transactions are expected to remain below the 1 million mark for the forth year in a row in 2011.  A steady revival in prices is expected starting from 2012 although we do not expect to see a full return until 2015.”

Michael added: “Despite these negative near term influences, the UK housing fundamentals mean that we are just awaiting the next house price growth which is inevitable and likely to come sooner than most people are predicting."

Speaking about the West Midlands Industrial market, Carl Durrant, partner Industrial, added: “General occupational demand in the industrial market whilst improving remains fragile.  Growth in internet retail sales continues to underpin the logistics market and we anticipate the bulk of activity will mainly be driven by this as well as more space being taken by companies active in the waste management and renewable energy sectors.”

Carl continued: “The supply of new modern stock continues to reduce and whilst we anticipate there will be no new speculative development for the foreseeable future we will continue to see an increase in built to suit transactions largely due to the ongoing uncertain economic outlook and persisting tight finance conditions for speculative development.”

Ed Gamble, director in Jones LaSalle National Investment said that whilst office investment volumes in Birmingham in 2010 were up to pre-recession levels, the investment market, along with other key regional centres, has been relatively weak in the first six months of this year.

Ed said: “Prime yields have continued to remain stable at 6.00% in Birmingham with purchasers focussing on good quality, well-let properties and a clear divergence between prime and secondary as well between vendors and purchasers’ aspirations has emerged.  With yields forecast to remain consistent in the medium term investment performance will be dependent on income return and rental growth and we expect to see continuing demand from a range of investors with the best space continuing to trade well but there remains a concern regarding pricing on secondary space.  We also are encouraging our investor clients to consider prime buildings on a shorter income as well as target rack rented building and multi let with tenant/landlord voids.”

Jonathan Fear, director, National Office Agency highlighted that the supply of Grade A office space in Birmingham city centre continues to be eroded and, given occupier preference for high quality accommodation, expected supply to become constrained over the next 24 months.

Jonathan concluded: “Looking ahead, there is very limited speculative development completing during 2012-14, meaning that those occupiers seeking larger units of Grade A space will need to start considering pre-let options. This will in turn deliver rental growth in the city and ultimately encourage speculative development over the longer term.”