Figures just out show higher take up of office space in West London than the wider Thames Valley, with available space in the sub-region falling despite increased speculative development and investment.
Jones Lang Lasalle’s Western Corridor figures show investment volumes in Q1 2014 totalling £229million, an increase of 58% year-on-year, while take-up in the area totalled 369,710 sq ft, a 43% drop compared to the same period in 2013.
The supply of space in the Western Corridor remained static throughout the quarter, according to the figures, with 12.7million sq ft available and a vacancy rate of 14.3%. However, West London supply fell by 5% year-on-year to a total vacancy rate of 8% compared to a 7% rise in the Thames Valley.
James Finnis, Head of South East Office Agency at JLL said: “The relatively poor Q1 take-up stats mask wider activity in the market. Named demand stands at just shy of 4m sq ft and many of these tenants are poised to deal in the next couple of quarters. The development pipeline has delivered a limited pool of high quality buildings and we will see a number of these new developments letting quickly, generating good rental growth. We have seen PDR transactions with office buildings going to residential – this will help to drain the supply of Grade B space across the wider Western Corridor.
“The West London market continues to suffer a shortage of Grade A space. Whilst the spec pipeline in West London has 630,000sq ft due to complete during 2014, this will not satisfy current demand and we will continue to see concentrated rental growth in this geography.”
Angus Minford, Director, South East Office Investment at JLL said: “Following an exceptional 2013, when the sales of Chiswick Park and IQ Winnersh dominated activity, the investment market has remained buoyant, with particular focus being on the improving secondary market.
“Prime yields in the Thames Valley remain at 5.70% with West London moving into 5.50%. Both are trending keener.”
