Office demand falters – JLL
Despite a good take-up level for office space during Q3 2010, JLL has reported concern about future demand in its review of the Office Occupier Trends for the third quarter. After a promising start to the year, enquiries for UK office space continued to deteriorate in Q3, King Sturge says. The firm’s UK network recorded a 28% fall quarter-on-quarter in the number of significant enquiries, with a similar-sized fall in the amount of floor space required by occupiers. “Significant” enquiries are for properties over 50,000 sq ft in Central London and over 10,000 sq ft in the key regional centres.
“In the last 12 months there have been six centres which have registered an increase in the number of enquiries from the previous year. These were Bristol, Nottingham, the West End of London, Newcastle, the South East and Southampton. The most notable of these was Nottingham, where a 100% rise in the number of enquiries was recorded. Newcastle and Southampton also registered large increases, of 45% and 35% respectively (year-on-year).”
London has clearly driven the office market take-up over the past year, King Sturge notes, with a trend for the past 12 months at 39% above the annual survey average. By contrast, the rest of the UK performed at 16% below average in the year to September 2010. Around the UK, Manchester, Nottingham and Cardiff all performed above the survey annual average, while the Thames Valley nearly equalled the average after particularly high take-up in Q3. The other regional centres surveyed by King Sturge all underachieved over the past year.
By sector, take-up in Q3 jumped strongly in financial services occupiers, and also increased in the business services sector. Public-sector take-up contracted by 85% from the previous quarter to 20,000 sq ft, the lowest since the firm’s survey began. King Sturge expects public-sector demand to remain depressed in view of the government’s spending cuts.
