JLL – Office take-up in the Western Corridor surpasses 1m sq ft
The latest research from leading real estate adviser JLL has shown that 1.1m sq ft of office space was let across the Western Corridor in the first half of 2019, representing an increase on the corresponding period of 2018 of 14%.
The first two quarters of 2019 have seen occupiers from a wide range of sectors commit to new space in Western Corridor locations. Large transactions within the West London market include Li Fung’s move to White City (50,431 sq ft), Gartner’s pre-let of 1 The Causeway Park, Staines (46,695 sq ft) and Canon’s deal at 5 The Square in Stockley Park (36,000 sq ft). Within the Thames Valley market, deals included Thames Valley Police acquiring 42,120 sq ft at Station Plaza in Reading, Thames Water’s deal at Reading Bridge House (28,605 sq ft) and Alcon acquiring 22,812 sq ft at Watchmoor Park in Camberley.
According to JLL the last two years have seen the Western Corridor office market characterised by a sustained erosion of the development pipeline and a lack of new speculative development. At the half year point supply of Grade A space approximately totalled 5m sq ft which is a reduction of 17.4% year on year. The development pipeline is beginning to respond and now stands at 1.37m sq ft on site, albeit this is less than half of the 3.3m sq ft of onsite development stock recorded in 2016.
James Finnis, head of south east office agency at JLL, said: “Take-up levels across the Western Corridor remains healthy with both new and indigenous tenants actively seeking to acquire space. Rental tones are holding firm and in some locations with limited supply headline rents are increasing. The growth of flex space continues with both operator centre openings and landlords’ white label offers. Whilst the region’s fundamentals are undoubtedly sound, transactions are taking longer to conclude as occupiers show apprehension in the face of a lack of certainty around Brexit. This may lead to activity slowing in the second half of the year.”
JLL’s research cited that £500m was invested in the Western Corridor office market in the first half of the year, representing a fall of 26% on the first six months of 2018. The findings also highlight that a majority of the transactions were undertaken by UK investors, but overseas investors still remain active.
Angus Minford, head of national investment at JLL, said; “Political uncertainty is continuing to impact investor confidence at present and is most acutely felt by international investors. The health of the leasing markets will provide an important indicator for investor confidence. There is plenty of patient capital waiting to enter the market although much of this is sitting on the sidelines awaiting further clarification on Brexit outcomes.”
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of over 91,000 as of March 31, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated.