The grim but not unexpected news in Jones Lang LaSalle’s Central London Market Seminar this morning was that office space investment volumes and take up have fallen by a third for the last quarter.
Occupier take up deals for central London office space have fallen by 34%. In a four-year low, only 1.9m square foot of London office space has been let in 100 deals. The demand for office space has decreased by almost 20% and is expected to drop further in the coming months.
Jones Lang LaSalle report that the year to date total take up for office space in the City is 41% behind the same period last year.
Neil Prime, head of office and city agency at Jones Lang LaSalle said: “There will always be a market, it’s just volumes that may vary. The downturn is more severe and longer lasting than previously anticipated so it’s no surprise that we are saying conditions are tough and are getting tougher. As occupiers re-trench in reaction to the global economic climate rents will continue to fall until at least the end of 2010. However, the first signs of a bounceback will be felt in the City, where we expect demand to accelerate in response to a shortage of supply.’
Investment in central London office space has also fallen by almost 30% since the last quarter, investment in the City totalled just over £550m in quarter 3 this year, almost 40% less than in quarter 2.
Andrew Hawkins, lead director in the City Investment team at Jones Lang LaSalle said: ‘Banks will dictate the change in market pricing and we will see a turn around in 2009 as forced sales create transparency on pricing.’