Q2 office space take-up down in Western Corridor

Half year take-up totals 562,000 sq ft according to Jones Lang LaSalle’s latest research

Article posted: 18 Jul 2011

Occupier demand for office space in the Thames Valley and West London increased by 45% quarter on quarter but Q2 2011 take-up was down according to the latest research from Jones Lang LaSalle. A marked uplift in active named occupier demand in the Western Corridor region was witnessed in the second quarter of 2011.

Over 3.2m sq ft of requirements for office space over 5,000 sq ft was recorded which is a 45% increase compared with Q1 2011 and 17% higher than the equivalent period last year (Q2 2010). Active named demand levels in Q2 2011 improved by 51% compared with the five year average 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 Jones LaSalle’s National Office Agency team, said “We have seen 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.”

Office take-up in Q2 2011 was relatively subdued, with around 169,000 sq ft let across the Western Corridor region however there is a further 239,000 sq ft of office space in West London and the Thames Valley currently under offer. Jones Lang LaSalle expects to see further consolidation, particularly within the Pharmaceutical and ITT sectors, which will continue to drive leasing activity over the next year. 

Overall office supply in the Western Corridor fell to 12.2m sq ft in Q2 which reflects an overall vacancy rate of 14.2%. Compared with the same period last year, overall supply has fallen by 5.8%. While some space has been reabsorbed through leasing activity, Jones Lang LaSalle highlights that a number of buildings have changed used, particularly from office into residential. Grade A supply also fell to its lowest level since 2008, to reflect a vacancy rate of 5.9%. However, there remains considerable variation across the region with Grade A vacancy rates in West London currently at 3.3% compared with 8.6% for the Thames Valley.

Across the Western Corridor market, rents increased marginally over the quarter (+0.1%) driven by further upward pressurefor office space in Chiswick. Incentives were stable at 30 months rent free on a 10 year lease in the Thames Valley and 24 months in West London. JLL expects annual growth of 1.8% over 2011 taking the average prime rent for the region to around £28.00 by year end, from £26.00 today.

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Posted by Sara