Busy May for City office leasing – Jones Lang LaSalle

Activity in the market for City office space to let in May reached one of the highest monthly totals on record, says Jones Lang LaSalle. A total of 793,400 sq ft was taken up last month, which represents a 117% jump from April and is 135% above the figure for May 2012.

The busy May takes year-to-date take-up to 2.2m sq ft, Jones Lang LaSalle points out, which is a 46% increase on the equivalent period in 2012. The firm recorded five lettings over 50,000 sq ft in May, of which three were pre-lets of more than 100,000 sq ft. These were Amazon at Sixty London, EC1 (213,000 sq ft), Bird & Bird at 12-14 New Fetter Lane, EC4 (136,200 sq ft), and Amlin at The Leadenhall Building, EC3 (111,800 sq ft).

Dan Burn, director of office agency at Jones Lang LaSalle, says that despite the large deals completing, activity remains “very healthy”, with almost 1.4m sq ft of City offices currently under offer and active demand registered at 6.6m sq ft. He points out that occupiers are being forced “to bring their future requirements to the boardroom agenda” as a result of the strong current activity levels and the small amount of speculative development currently taking place. “This is especially prevalent for those occupiers with lease events in 2015-2018, as concern rises over the long-term availability of suitable product,” he adds.

JLL expects continued upward pressure on prime rents for City offices to let, which it says are currently £57.00 per sq ft, after rising 3.6% in 2012. The erosion of current supply, combined with strong demand for product being delivered in 2014 (already nearly 60% let) and continued pre-let activity, “will strengthen landlords’ stances and put further pressure on prime rents in the City,” the firm says.