Pre-lets, or creative thinking?
The word ‘expansion’ has resurfaced among corporate occupiers, says Jones Lang LaSalle, and activity is primed to increase across EMEA property markets. Vincent Lottefier, head of JLL’s corporate solutions EMEA team, says corporate cash balances are ‘in rude health’, which will enable investment and acquisition activity to take place. The desire among some occupiers to expand is underpinning some floor-space requirements in the market, he notes.
After a roller-coaster couple of years, things are now changing as strategic planning is taking hold. But the forecast increase in occupier activity creates a new challenge of its own, JLL says. Its head of EMEA occupier research, Dr Lee Elliott, says the amount of quality supply in the market is ‘extremely limited’ and under real pressure from the rise in demand. “The sparse development pipeline across the region – a product of declining developer confidence and limited developer finance – will offer little respite,” he adds.
The growing demand and low supply is leading office occupiers to adopt a strategy of pre-lettings, which enables them to shape a property to their specific requirements – and also enables developers to obtain funding. While those occupiers with a clear strategy are benefiting from this situation, Vincent Lottefier cautions that others, needing to respond to a demand to expand from their wider business, should think creatively about their existing space. For many occupiers, he says that squeezing more value out of existing floor-space may be the only real solution, in a market in which quality supply is scarce.
