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The office property market in London will be in for some challenging times over the course of the next 12 months, analysts from Jones Lang LaSalle are claiming. According to them, the leasing markets across all of Central London are almost certain to be flat during next year, although they do say that rental growth should return to Central London in 2013.
The supply gap gap expected between 2013 and 2016 is also being exacerbated by the present economic environment, says Jones Lang LaSalle’s head of office, Neil Prime. “This will provide opportunity for those who can speculatively develop or refurbish existing stock as when the occupational market returns choice will be limited and competition will increase, driving rental returns”, he claims. Prime’s team also points out that the office market in London is far from being immune to short-term volatility, but at the same time note that they believe London will, over the course of the next five years, easily outperform competitor markets in both Europe and the rest of the world.
Rental forecasts are indicating that there will be strong growth in the market by 2015, with prime office space rents expected to rise as high as £120 per square metre in the West End, an increase of 20 per cent, and £67.50 in the City, an increase of 23 per cent.
Major opportunities for development will also arise due to a combination of pent up demand, low supply, and structural events.
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