2012 may not be all that smooth sailing for the London office property market but there are opportunities too, according to global real estate services company Jones Lang LaSalle. While leasing activity is expected to be low, rental prices could witness a growth.
However, Jones Lang La Salle pointed out that the country's office space sector could outperform its European and other global competitors across the next four to five years, while also adding that short-term volatility is not out of the question. It also said that office rents could go up by 2015, and expected a 20 per cent increase in London's West End and a 23 per cent increase in the City.
British Land, the country's leading REIT and property company, recently said that there was a strong demand for office property in prime areas. It reported that many companies will be renewing their London office property lease in 2013-2015. It however noted that there is a shortage in supply of prime ‘Grade A’ office properties, and with leases due for renewal, it is difficult to predict the availability of office space.
At the same time, British Land noted that West End was looking attractive owing to its employment breadth and also stated that the City had remained extremely resilient over the past years.
Jones Lang La Salle stated that the present supply gap and fragile economic environment will provide an opportunity for developers who refurbish their present stock or take on more development projects. This is because when occupancy increases, there will be a limited choice and increased competition, resulting in higher rental returns.