Increase in Q1 2011 office take-up in Western Corridor region

JLL research shows 48% year-on-year increases with take-up more evenly spread between in-town and out-of-town locations

Article posted: 19 Apr 2011

Jones Lang LaSalle has reported a positive start to the leasing market for office space in the Thames Valley and across the Western Corridor region with a 48% year-on-year increase in leasing volumes. Over 393,000 sq ft of office space was let in the first quarter of this year which was broadly in line with the previous quarter.

Take-up activity in the Western Corridor region was driven by a number of significant office deals including Adobe Systems taking 49,500 sq ft of office space in Maidenhead at Market House (pictured) and the acquisition by BP of 36,400 sq ft offices in Stockley Park at 5 The Square.

Despite the clear improvement in leasing volumes, take-up in Q1 2011 has however fallen short of the 10 year average (down 36%); activity was once again largely driven by lease events rather than any single growth sector. JLL’s research suggests further consolidation, particularly within the Pharmaceutical and ITT sectors, which will continue to drive some leasing activity over the forthcoming year. Deals have continued to be driven by the Manufacturing and Service sectors, which accounted for 77% of take-up in the first quarter. 

JLL reports that occupier demand for office space across the region increased slightly over Q1 to reach 2.2m sq ft, while overall supply of offices in the region also increased slightly in Q1, to 12.5m sq ft, reflecting a vacancy rate of 14.6%. This increase was driven by a rise of 4% in the level of Grade B supply. In contrast, Grade A vacancy rates remained stable at just 6.0% across the Western Corridor with the supply of Grade A office space in the West London submarket even more constrained, with vacancy rates falling to just 3.1% over Q1.

Across the Western Corridor market, rents increased 0.8% over the quarter driven by upward pressure for office space in Chiswick and offices in Windsor. Rents in the remaining key centres were stable compared with the previous quarter. Incentives were also stable at up to 30 months rent free on a 10-year lease in the Thames Valley and 24 months in West London. JLL expects annual growth of 3.6% taking the average prime rent for the region to around £28.42 by the end of this year.

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Posted by Jo