The year of the pre-let?
JLL says that thanks to the difficulties in obtaining debt finance over the past two years, the speculative development pipeline for City of London offices will deliver only modest volumes of office space by 2015, at a time when a potential 8m sq ft of lease events will mature.
“Consequently, 2010 could prove to be the year of the pre-let for a number of high-profile corporates,” the group says. “Occupiers will be considering their property strategies now. Many will realise they must now consider the pre-let route to procurement.”
In its survey of the City offices market for Q1 2010, JLL notes that supply fell by a further 14.2% in the first quarter, and the vacancy rate dropped to 9.5%. Take-up jumped 22.2% from the previous quarter and prime rents leapt by 10.5% to £47.50 per sq ft.
With such a strong rebound in the market from last year, some of the tower office developments previously put on hold are now expected to be reactivated. Among these are the Pinnacle on Bishopsgate, where JLL says the developers are thought to have acquired around £600m of debt finance in the past few months to enable them to press ahead with construction, and the Walkie-Talkie scheme on Fenchurch St where Land Securities is planning to go ahead with a joint-venture partner.
