The Blast Alliance

In the Autumn 2009 Western Corridor Office Market Report, Jones Lang LaSalle predicts that the Thames Valley and West London areas would be hit hardest by the continuing current downturn in the economy.

The recession has seen a flight of companies from the high-priced London commercial space market, with many of them preferring to move into suburbs or smaller cities to cut down on leasing costs. The new developments in the Western Corridor, namely the areas of Maidenhead, Bracknell and Slough, will bear the brunt of this exodus the most. A number of projects underway in these areas have stalled or are running below full capacity. The report from the real estate investment firm estimates that a total of 1.3 million sq ft of desk space will fall vacant in these areas alone.

Part of this will be due to the addition of nearly 700,000 sq ft of new office space scheduled for completion by December 2009. The rest will be from companies reducing space occupancy due to manpower reductions, relocations or mergers. The estimated vacant office space available in London by the end of 2010 will be close to 4 million sq ft, which will be a mixture of new developments, second-hand space and tenant- controlled properties to be vacated.

This trend will continue to push down rentals as well. Rental income is expected to show negative growth with 2009 alone witnessing a drop of 11.2%. The turnaround is expected to start only in 2011, with an average growth of 1.1% for the next four years.