Surplus Space Swamps Central London Office Market

LONDON-The vast majority of office floorspace overhanging the central London market is in the hands of occupiers looking to sublet or assign surplus space. According to a new report from Jones Lang LaSalle occupiers currently control over 70% of both grade A and B space available in London.

Sue Foxley, Head of UK Research at Jones Lang LaSalle said: “The need for occupiers to take pre-lets of larger buildings, and to take greater control of their space needs, based on what now appears to be over-exuberant growth projections, have left occupiers as ‘accidental landlords.”

Through the mid-to-late 1990s, the development industry proved incapable of providing the size and type of unit required by large financial services operations and law firms, which forced them into taking pre-lettings in order to take greater control of their space needs. And now they have a stranglehold on the market.

Jones Lang LaSalle City Director Richard Norton suggests that occupiers with surplus space could look at sub-letting space by providing a fully serviced offer. “But where does this leave the traditional investor/ developer?” he asked.