Member Article

Leasing market in Western Corridor hits 1.1 million sq ft

Western Corridor office leasing market has had a strong first half of the year, with take-up hitting 1.1 million sq ft in the first six months, an increase of 30% year on year, with an almost even balance between the West London and Thames Valley markets.

In statistics released by JLL, there is over 1 million sq ft under offer, with more than 4 million sq ft of named demand. Manufacturing and TMT are the most prominent sectors looking to secure space, driven by M&A activity and net growth requirements.

The commercial and residential property investor projected full year take-up to exceed 2014’s total of 2 million sq ft by more than 25%, pushing above the five year average of 2.2million sq ft.

Total supply continues to fall as space is drained to alternative uses; supply has reduced by over 10% year on year. Permitted Development Rights to Residential continues to be a major factor in the reduction in stock levels.

Reacting to this increase in take-up and reduction in supply the development pipeline is growing with just over 2.7m sq ft of new development and refurbishment activity on site across the wider Western Corridor.

James Finnis, Head of South East Office Agency at JLL said: “Whilst H1 take-up has delivered a solid platform for the balance of the year it is notable that there was a lack of major deals in Q2 and take-up volumes are below expectations.

“There has been a marked increase in confidence post General Election and there is a growing realisation that supply and therefore choices for occupiers are limited. Rents continue to grow; we have seen a 5% increase in headline rents year on year, driven by occupiers taking the best space and change of use to residential which is decreasing stock from the bottom up.

“We are forecasting a busy H2 particularly Q4 where we see a number of +75,000 sq ft deals crossing the line. This will echo the last two General Election years where take-up activity was focused in Q4.”

Angus Currie, Head of South East Office Tenant Representation at JLL said: “After twelve months of analysis and strategy, this year has seen occupiers start to make decisions with regards to their future real estate requirements, with consolidations and relocations proving to be a key driver of take-up in the South East offices market.

“There are a number of strategic real estate projects coming forward across the markets that have been underway for some time.

“This is a trend we only expect to gain further momentum as we move into the second half of the year, with interests in pre-lets to remain high due to a lack of existing stock.”

The Western Corridor market has witnessed continued growth in prime rents in 2015, with the average increasing by 5% year on year to stand at £32.25 sq ft. Bracknell, Camberley, Hammersmith, Maidenhead and Reading all recorded rental growth in the second quarter of the year.

This was posted in Bdaily's Members' News section by Ellen Forster .