Office take-up in the Western Corridor has reached 1.1m sq ft in the first half of 2019, an increase of 14% on the corresponding period of 2018, reports JLL.
The first two quarters of 2019 have seen occupiers from a wide range of sectors commit to new space in Western Corridor locations, JLL says.
Large transactions within the West London market include Li Fung’s move to White City (50,431 sq ft), Gartner’s pre-let of 1 The Causeway Park, Staines (46,695 sq ft) and Canon’s letting at 5 The Square in Stockley Park of an extra 36,000 sq ft.
Within the Thames Valley market, deals included Thames Valley Police acquiring 42,120 sq ft at Station Plaza in Reading, Thames Water’s deal at Reading Bridge House (28,605 sq ft) and Alcon acquiring 22,812 sq ft at Watchmoor Park in Camberley.
According to JLL the last two years have seen the Western Corridor office market characterised by a “sustained erosion of the development pipeline and a lack of new speculative development”.
At the half year point supply of Grade A space approximately totalled 5m sq ft, a reduction of 17.4% year on year. The development pipeline is beginning to respond and stands at 1.37m sq ft on site, JLL said, “albeit this is less than half of the 3.3m sq ft of onsite development stock recorded in 2016”.
James Finnis, head of south east office agency at JLL, said: “Take-up levels across the Western Corridor remain healthy with both new and indigenous tenants actively seeking to acquire space. Rental tones are holding firm and in some locations with limited supply headline rents are increasing. The growth of flex space continues with both operator centre openings and landlords’ white label offers. Whilst the region’s fundamentals are undoubtedly sound, transactions are taking longer to conclude as occupiers show apprehension in the face of a lack of certainty around Brexit. This may lead to activity slowing in the second half of the year.”
JLL’s research cited that £500m was invested in the Western Corridor office market in the first half of the year, representing a fall of 26% on the first six months of 2018. The findings also highlight that a majority of the transactions were undertaken by UK investors, but overseas investors still remain active.
Angus Minford, head of national investment at JLL, said: “Political uncertainty is continuing to impact investor confidence at present and is most acutely felt by international investors. The health of the leasing markets will provide an important indicator for investor confidence. There is plenty of patient capital waiting to enter the market although much of this is sitting on the sidelines awaiting further clarification on Brexit outcomes.”