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Jones Lang LaSalle
Office Property Development
Property investment deals could likely rise in the Western Corridor of London on the back of a solid 2012 performance. Figures from Jones Lang LaSalle showed the area witnessed a rise in office take-up, peaking at two million square feet. This is in line with the five-year annual average and has been driven by the West London sub-market, where annual take-up totalled 1.15 million square feet. This greatly surpasses the five-year annual average of 963,500 square feet. Nevertheless, not all parts of the Corridor enjoyed such a buoyant year, with the Thames Valley's annual take-up falling 22 per cent on average levels, standing at 843,900 square feet at the end of the year. Grade A vacancy in West London is also low, at 2.9 per cent, despite a number of speculative development schemes being completed in Q4 2012. Although total supply across the Western Corridor increased seven per cent year-on-year, thanks to a release of second hand Grade B space in the Thames Valley, stock levels are likely to stagnate. According to Jones Lang LaSalle, development remains constrained, with just 540,000 square feet on a speculative basis set for completion in 2013. Limited starts on sites are also projected past this year. This isn't good news for the undersupplied West London market, driving up rents and leading to fierce competition for prime properties. James Finnis, head of the South East Office Agency at Jones Lang LaSalle, stated: "Grade A vacancy rates are historically low in many centres in the Western Corridor and the Development Pipeline is not filling the gap. This mismatch between supply and demand is feeding through to rents and we are forecasting further rental increases in a number of undersupplied locations." Prime rents in the Western Corridor have held up well thus far, increasing by 4.8 per cent year-on-year. This has been driven by the West London market, where rents have risen by 8.8 per cent over the year. The outlook for the Western Corridor is also positive this year, thanks to an increase in named active demand, which was up 42 per cent in Q4 2012 on the same period in 2011.
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