Office occupier demand rises in Western Corridor, but confidence still weak – JLL
The Western Corridor region – encompassing west London and the Thames Valley – saw a strong increase in active named occupier demand during the second quarter, says recent research from Jones Lang LaSalle. The firm says occupier demand for offices in the area jumped 45% quarter-on-quarter, but take-up was down in the Western Corridor region at 169,000 sq ft, which JLL says reflects continued weak occupier confidence and “deals taking time to complete”.
JLL notes that there is a further 239,000 sq ft of space currently under offer and expects to see more consolidation – particularly in the Pharmaceutical and ITT sectors – which will drive leasing activity during the next year.
JLL says the overall office vacancy rate for the Western Corridor was 14.2% in Q2, with a number of buildings having changed use from office to residential. Grade A supply fell to its lowest level since 2008 to reflect a vacancy rate of 5.9% overall, but this figure is just 3.3% in west London, compared with 8.6% for the Thames Valley.
During the second quarter, more than 3.2m sq ft of requirements for office space over 5,000 sq ft was recorded, up 45% from Q1 and 17% higher than the second quarter of 2010. Active named demand levels were up 51% compared with the five-year average, JLL says, “with requirements once again dominated by the Manufacturing and Services sectors, which accounted for around 85% of all active named demand in the Western Corridor”.
James Finnis, head of JLL’s national office agency team, says there is “a good pack of deals” now in solicitors’ hands and, with active demand growing, the firm expects this to lead to more deals in the second half of the year. He noted that JLL saw an increase in the number of large-scale requirements in Q2 2011, “with 18 active requirements for over 50,000 sq ft of office space, compared with just 13 in the first quarter of the year. The average requirement size has also increased by 12% to around 40,000 sq ft,” he added.
