More than £1bn of real estate was transacted in the Western Corridor office market in 2014, according to JLL research.
Requirements now stand at 5.3m sq ft, up 78% year-on-year from 3m sq ft. The services sector is driving demand, and accounted for 48% of enquiries last year.
Supply continues to fall owing to take- up and permitted development rights. Total supply now stands at 11.4m sq ft, which equates to a vacancy rate of 12.7%.
Grade A vacancy has fallen and now stands at an average of 5% across the region, although in west London it is only 2.8%. Some 1.5m sq ft of space is under construction on a speculative basis, which represents a replacement rate of just 1.7% of total stock.
Mark Wilson, director, South East office agency at JLL, said: “The year 2014 was a strong one for the Western Corridor investment market with a number of trophy assets transacting including One Reading Central (pictured) for £95m, 77 Fulham Palace Road, W6, for £82m and Ealing Cross, W5, for £67m.
“The market in 2014 was dominated by the UK institutions, with strong interest also evident from US private equity. Our prediction for 2015 is that demand will be high and this will emanate from a more varied investor base. Pricing will continue to harden with assistance from continued occupational take-up and evidence of rental growth.”
