Amid the UK’s challenging political and business climate office JLL is predicting that office investment volumes in the Western Corridor for 2019 will be around £900m, down from £1.9bn in 2018.
So far in the region just over £500m has transacted, JLL reported.
“Whilst investor caution has played a part in the reduced levels of investment, the availability of suitable product remains low and motivated sellers are in short supply,” said Angus Minford, head of national investment at JLL.
“2019 has been defined by the transaction of smaller lot sizes with most activity happening below the £30m mark, and the year has also been characterised by the dominance of domestic investors as foreign capital awaits clarification on Brexit.
“We expect 2020 to see the emergence of a more dynamic market with further political clarity and the occupational fundamentals remain sound. Global investors do want to return to the Western Corridor but will require resolution of the current political uncertainty.”
However, office take-up in West London and the Thames Valley has been steady so far in 2019, with JLL expecting total take-up for the year set to reach 2.1m sq ft – equivalent to the 10-year average.
JLL added that the development pipeline in the Western Corridor had also been further eroded with only 1.2m sq ft being currently built compared to over 3m sq ft on site in 2016.
“Occupiers in West London and the Thames Valley are more sophisticated and demanding than ever and view their real estate as a key driver for business growth. Quality, location and flexibility are key considerations for all occupiers and developers will have to deliver exceptional schemes to meet the demands of this evolving market. Cat A+, rentalising fit-out and landlord-operated white-label flexspace are growing themes,” James Finnis, head of south east office agency at JLL, said.
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