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News Release

London

Growing Pains Await Corporate Occupiers

According to Jones Lang LaSalle research


London, 22nd June 2011 – Jones Lang LaSalle’s Q2 2011 EMEA Corporate Occupier Conditions research shows that office occupiers may face the new pressure of accommodating growth and expansion.  Vincent Lottefier, Head of Jones Lang LaSalle’s Corporate Solutions EMEA team; “The last 24 months have been quite a roller-coaster ride for office occupiers in EMEA.  Economic and operating conditions have been turbulent; uncertainty has been rife; and manoeuvring to take advantage of softer real estate market conditions has been constrained.”

Vincent Lottefier continued; “Things are changing.  Corporate cash balances are in rude health and will enable both investment and acquisition activity.  Coupled with a greater degree of certainty, this has enabled strategic planning to take hold.  Critically, the word ‘expansion’ has resurfaced and is underpinning some floor-space requirements in the market.”

According to Jones Lang LaSalle, occupier activity across EMEA real estate markets is primed to increase and this is creating a further challenge.  Dr Lee Elliott, Head of EMEA Occupier Research at Jones Lang LaSalle, added; “Despite overall office vacancy rates being at double digit levels, the amount of quality supply in the market is extremely limited and, given rising demand, under real pressure.  The sparse development pipeline across the region – a product of declining developer confidence and limited developer finance – will offer little respite.”

Jones Lang LaSalle highlights that in this low supply environment, EMEA office occupiers are moving towards a pre-letting strategy.  This creates an opportunity for them to drive a deal and shape the space to meet with requirements and enables developers to obtain funding by virtue of having secured a tenant. 

Vincent Lottefier, concluded; “Is this a win, win situation?  Well for those with a clearly defined and forward looking real estate strategy it is.  But for those CRE (Corporate Real Estate) leaders needing to respond to expansionary demand from their wider business, having a solution two to three years down the line is not likely to cut it.  In this situation CRE leaders need to think creatively about their existing office space.  They need to drive greater productivity from their existing portfolio by focusing on the workplace and underlying working styles.  Squeezing more value from existing floor-space may for many be the only real solution in a market short on quality supply.”

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