Squeeze on Office Space set to Continue Into 2012

LONDON, January 18, 2012 /PRNewswire/ --

Businesses that are looking to move to new serviced offices in 2012 could find that they are unable to find suitable space for their requirements, despite experts believing the take-up rate could be lower than usual.

Research from Jones Lang LaSalle (JLL) has found that although the take-up rate for offices is expected to be below the average, certain areas could run out of prime office space by the end of the year. High demand and a lack of new development means that there could be shortages of London serviced offices. In the City of London there could be a shortfall in 11 months and in the West End in just 8 months.

The shortfall means that rental prices are expected to increase. JLL forecasts that across the UK as a whole rents will increase by 1.7% this year but will be higher in regions with shortages including the City (3%) and the West End (3.5%).

Alongside these figures, research from DTZ has found that poor grade C rated office space exceeds the amount of grade A and B space available. Across the UK, about 70% of the total office stock is thought to be grade C, in comparison grade A and B stock make up 9% and 22% respectively.

Although grade C office space makes up a significant proportion of the UK's office stock, there is much less of it available. Only 3.5% of grade C office space is thought to be available, compared to 12% for grade B and 19% for grade A offices.  

Martin Davis, Head of UK Research at DTZ, said: "Contrary to our expectations grade C has a lower availability rate than grade A and B stock. Nevertheless, we expect this position to deteriorate in the face of continued low economic growth and competition for occupiers from better quality space."

It is expected that the availability of grade C office space will increase, especially outside the capital, as many landlords are now enticing their clients to higher quality offices so there is the possibility of poorer office space being given an alternative use according to DTZ, which could contribute to the current squeeze.  

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