Crisis creates big incentives for UK office occupiers - JLL

Certain areas of the UK, in response to the recession, are offering office occupiers increasingly competitive rental costs with some of the best incentives available for 10 years, according to new research from Jones Lang LaSalle.

The research examines 100 UK markets and reveals that in terms of real cost savings some of the biggest opportunities for occupiers can be secured in major regional centres such as Birmingham, Manchester and Liverpool.

JLL said falling occupier confidence and accompanying headcount reductions have and will continue to impact upon the UK’s real estate markets. Revenues are under pressure and occupiers remain in survival mode, intent on achieving significant cost savings.

Consequently, occupational demand has fallen across the key UK regional cities, most dramatically in certain parts of London where take-up in Q1 was 66% below the quarterly average. The reduction in demand has left landlords fighting for tenants to avoid paying business rates on empty buildings.

Given the reduced leasing activity it is difficult to accurately predict property cost changes. The continued contraction in the economy, however, combined with increasing supply is reducing expectations of achievable rents.