Positive outlook for Central London offices – Jones Lang LaSalle
London remains the key destination for global capital flowers, and an attractive location for occupiers to take advantage of an innovative and entrepreneurial environment, but it cannot become complacent and must continue to evolve in order to remain the global city of choice. So says Jones Lang LaSalle, which has been examining the market for Central London office space in its annual seminar this week.
Neil Prime, head of UK office agency at Jones Lang LaSalle, expects pre-lets to return to the market during the next 12 to 18 months as supply remains constrained. Dan Burn, head of London City agency at the firm, says the outlook points towards an increase in rental growth during H2 2013 and a development response led by pre-lets. He notes that a new scheme that starts demolition in Q1 2013 could be delivered by Q2 2015 at the earliest.
Some of the demand for Central London office space is driven by re-gearing on a short-term basis (three to five years), and at the larger end this will add to the pent-up demand “and will become the target for pre-letting opportunities,” said Jonathan Evans, head of West End agency and Central London development at JLL. “Residential conversions of the West End towers will pose a threat to tenants who want a view and this will lead to migration to the iconic towers being provided in the City, such as the Shard,” he added.
In the medium term, the demand-side will become more demanding, says Lee Elliott, regional director EMEA research at JLL. “Corporate real estate decision-makers have a strong mandate from their senior business leaders to challenge the thinking underpinning property requirements,” he notes. He says this will lead to more scrutiny of the costs of a property, the contribution it makes to productivity, and ultimately its location.
London is set to remain the ‘capital of capitals’ in terms of property investment, JLL says, as new overseas investors come to the city. Andrew Burrell, head of forecasting at the firm, says London has been more resilient than the UK as a whole during the downturn and is forecast to outperform other major global office centres in terms of job creation in the longer term.
