Offices take-up jumps in Western Corridor – Jones Lang LaSalle

Jones Lang LaSalle says Q1 2013 take-up of office space in the Western Corridor, at almost 650,000 sq ft, was nearly four times the level of a year earlier, and a third above the five-year quarterly average of 487,500 sq ft. The total figure was driven by activity in West London office space, where take-up reached 408,000 sq ft in the first quarter.

BP took 135,000 sq ft at Building 2, Bedfont Lakes, which significantly boosted the total. JLL’s James Finnis, head of South East Office Agency at Jones Lang LaSalle, says the deal marks a “sea change”, with a major corporate taking a pre-let rather than re-gearing in existing space. “We are forecasting take-up in excess of 2.25m sq ft for 2013, with deals being driven by the pressing issue of obsolescence backed up by the hard deadline of The Energy Act,” he adds.

“There will be further pre-lets in 2013, which will help to drive rents forward, as investors/developers with new schemes will not be prepared to take the development risk unless they are seeing an adequate return,” he points out.

Take-up of Thames Valley offices rose 17% q/q to a total of 234,700 sq ft. The biggest transaction in this market was TAG at Farnborough Business Park (37,800 sq ft), JLL notes. Current supply in the Western Corridor is around 5% lower q/q and y/y, with the largest fall recorded in the Thames Valley. Grade A vacancy rates are currently 2.4% in West London, 7.7% in the Thames Valley, and 5.0% in the Western Corridor.

Average rents rose 4.8% y/y across the Western Corridor, with rents in the Thames Valley stable q/q and y/y while in West London rents were up 1.3% q/q and 8.7% higher y/y.

JLL says there is 2.4m sq ft of active named demand in the Western Corridor, which the firm says “is on a par with this time last year, and provides a solid base for the market going forward”.