GLOBAL - Global real estate transactions are set to continue to increase in 2011 as markets move in favour of landlords and investor confidence resurges, according to Jones Lang LaSalle (JLL).
In its latest Global Market Perspective report, JLL said global deal volumes increased by 50% in 2010, but that this was likely to rise by a further 20-25% in 2011.
The report said: "A combination of more upbeat economic data, positive business sentiment, stronger corporate profitability and the selective return of corporate hiring will contribute to higher leasing volumes, improving market fundamentals and heightened investor confidence."
JLL said corporate occupiers were again "flexing their muscles" and that improvements in the leasing markets were helping to build investor confidence.
"Corporate cash balances and earnings are strong, and major companies are poised to start spending again, just at the time when new supply in both North America and Europe is at a cyclical low," it added.
The report said shortages of quality space would emerge in 2011, helping to limit relocation options and causing a shift in favour of landlords. This trend will be particularly visible across Asia Pacific, where there are likely to be few tenant-friendly markets left by year-end, according to JLL.
The report predicted that leasing activity would "gain steam" in 2011, which will help to further erode vacancy rates from a global average of 14.1% today to below 13.5% by year-end.
Nonetheless, shortages of quality space will emerge and, in some core markets, the "shift from tenant to landlord-favourable market conditions will happen quickly as new supply dries up", JLL said.
Corporate occupiers looking for large blocks of offices in the global hubs will increasingly be at a disadvantage as new space over 10,000 square metres becomes rare, giving owners the opportunity to raise rents and decrease concessions.
JLL believes the supply of poorer-quality second-hand space will remain high and at significant discounts to prime.