2009 is likely to be the worst year ever in terms of take-up in London, with recovery in the occupational market not expected before 2012-2013, Neil Prime, head of office agency England at Jones Lang LaSalle, said during the Occupational Markets Briefing held in Cannes on Wednesdqy. 'Ooccupiers in London have two years of time and two years of value to take advantage of opportunities in the market. In real terms, net effective rents will soon be as competitive as they have ever been in the City,' he said.
2009 is likely to be the worst year ever in terms of take-up in London, with recovery in the occupational market not expected before 2012-2013, Neil Prime, head of office agency England at Jones Lang LaSalle, said during the Occupational Markets Briefing held in Cannes on Wednesdqy. 'Ooccupiers in London have two years of time and two years of value to take advantage of opportunities in the market. In real terms, net effective rents will soon be as competitive as they have ever been in the City,' he said.
JLL forecasts show a bottoming out in rents in both the City and the West End in 2010 and 2011, before rebounding in 2012, with a rapid acceleration in 2013. At the moment occupiers have the upper hand and they are in an excellent negotiating position as landlords chase the demand that will transact this year. 'We believe that employment will continue to contract over the next couple of years with 2009 likely to be the worst. This headcount reduction, coupled with a resistance to sanction major capital expenditure, will have a significant impact on take-up levels,' Prime said.
Continued consolidation and acquisition is forecast in the financial and insurance sectors, some of which will generate property requirements, the report concluded. The legal sector has entered a period of caution and in the short term further job losses are expected, but requirements remain. The media sector has been under real cost pressure in its core markets over the last two years and had to weigh up preferred product versus preferred location. There was a mismatch but the recent reduction in rents in their core markets has eased this pressure.
However, the bargaining power which occupiers currently have will not last forever, Prime warned. With no new construction underway, the current supply will gradually be eroded and by 2012 occupiers could be faced with a lack of availability, rents that will grow rapidly and reducing incentives - possibly at a time when their businesses are beginning to expand again. 'Planning ahead of this curve will be key,' he concluded.
