Market Area A40 Thames Valley West London M40 RUISLIP MARLOW GREENFORD A4 THEALE READING MAIDENHEAD A4 M4 A329(M) WOKINGHAM BRACKNELL WINDSOR A30 SLOUGH EGHAM LANGLEY IVER POYLE M25 UXBRIDGE WEST DRAYTON HEATHROW STAINES CHERTSEY M3 EALING FELTHAM HAYES SOUTHALL SUNBURY A40 BRENTFORD PARK ROYAL CHISWICK RICHMOND HOUNSLOW TWICKENHAM TEDDINGTON HAMMERSMITH WEYBRIDGE M25 CAMBERLEY M3 HOOK A30 FARNBOROUGH BASINGSTOKE The map shows the boundaries of the survey area. It is divided into West London and Thames Valley and then into sub-markets. The sub-markets are known by the name of a key town, although other towns and areas fall within them. Buildings are classified A, B or C according to the quality of their location and specification. Grade A is new or refurbished space of a high specification in a good location; Grade B is either good quality second-hand or moderate specification new space in a good location and Grade C is poor quality or badly located second-hand stock. DEFINITIONS Take-up Floorspace acquired for occupation by lease, pre-lease, freehold or long leasehold sale. Supply Floorspace on the market and available for occupation, or under offer and speculative developments currently under construction or substantial refurbishment. Under Construction Speculative development of new building or substantial refurbishment where construction activity is ongoing. Data employed is derived from various information sources collected by Jones Lang LaSalle Research. Data refers to A and B space over 465 sq m (5,000 sq ft). Prime Rent The Jones Lang LaSalle view of the highest rent per sq ft achievable for a hypothetical 929 sq m (10,000 sq ft) unit of Grade A space in a prime location, without any adjustment for incentives. Front Cover Image: BAA plc
Overview At the start of 2006 large new requirements, falling supply and tentative rental growth created an air of optimism in the Western Corridor. Six months on, however, we are still to see the sharp upturn in take-up expected by some, leaving the market in a period of gradual improvement. There have been few speculative completions and takeup, at around the ten-year average, has gradually eroded existing Grade A supply. Companies have been absorbing their surplus space and this has tightened supply. New enquiries seen at the beginning of the year are yet to be satisfied but they remain active. A relatively limited choice of high-quality, large units is increasing rental pressure in selected areas, despite an overall Western Corridor vacancy rate of 13%. This pressure will result in positive real rental growth across the region over the medium term. Looking ahead, we do not anticipate a new source of occupier demand that will have a structural impact on the market. Instead, future demand is likely to derive from innovation and change as well as a renewed focus on workplace efficiency and cost reduction. We foresee polarisation in the technology sector and convergence within the IT sector to be primary drivers, while emerging markets outside of the UK, such as India, China and Eastern Europe continue to create new demand from companies looking for footholds in Western Europe. This is counterbalanced by offshoring driven by cost reduction a trend that is set to continue. The internationalisation and growing diversification of the Western Corridor office market has implications for current and future space requirements. The serviced office sector has matured and offers crucial flexibility for the niche businesses and new entrants which represent a growing segment of the occupier base. At the other end of the spectrum, the need to service global clients will drive the evolution of ever larger players, particularly in the IT and telecoms sectors. The delivery of large floorplate space, offering the necessary environment and facilities, will be essential but will also bring challenges. Despite the evolving needs of occupiers, the perennial issues of the Western Corridor persist. Car parking remains a crucial issue for occupiers and the gradual erosion of car parking ratios, particularly in West London, has focused attention on buildings and towns with more generous provision. This, together with public transport improvements, will be a key element in determining the relative success of towns in the Western Looking ahead, we do not anticipate a new source of occupier demand that will have a structural impact on the market. Corridor. Given the growing focus on town centre locations, mixed-use development will continue to grow in importance and the availability of brownfield sites will be vital. The upturn in the occupier market and an expectation of continued steady rental growth is driving strong investment interest in the region. Investors keen to gain exposure to the rising market, with funds earmarked for the region, are facing a scarcity of income producing property on the market. There is therefore a growing focus on secondary assets and development sites driving up prices. Concerns are emerging over the ability of the market to fulfil current performance expectations and we believe this will increase focus on assets that offer long term appeal for occupiers. 1
Take-up Across the Western Corridor, take-up in the first half of 2006 reached 110,500 sq m (1.19 million sq ft) a 16% reduction on the second half of 2005 but a 6% increase on the equivalent period of 2005. There were distinct differences between the two sub-regions, however, with far more activity recorded in the Thames Valley than West London: 75,200 sq m (809,000 sq ft) and 35,700 sq m (384,000 sq ft) respectively, driven by the upturn in the IT sector. Figure 1 Western Corridor Take-up by Location 1995-2006 000 sq m 350 300 250 200 150 100 50 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 H1 2006 West London Thames Valley There were distinct differences between the two sub-regions, however, with far more activity recorded in the Thames Valley than West London. There has also been a bias towards Grade B space this year across the region, as Grade A choice erodes, with 67,700 sq m (729,000 sq ft) of Grade B space let compared to 43,600 sq m (469,000 sq ft) of Grade A. There were four deals between 4,650 sq m and 9,290 sq m (50,000 to 100,000 sq ft) in the Western Corridor, all of which were in the Thames Valley. Two were seen in Marlow Chelton Electrostatics and Dun & Bradstreet. Another was in Bracknell, where Siemens took 4,800 sq m (51,500 sq ft) in Building B, Bracknell Boulevard, in addition to 1,950 sq m (21,000 sq ft) at Building A. Siemens also acquired 2,640 sq m (28,400 sq ft) at Sefton Park, Slough. Table 1 Western Corridor Take-up January to June 2006 Address Size Size Occupier Achieved Comments (sq m) (sq ft) Rent Waterfront, Hammersmith 2,400 26,000 Betfair 30.00 psf Seven-year sub-lease from T-Mobile, with 14 months rent-free and an option to break at year 4 that carries a large penalty Reading International, Reading 2,400 26,000 Foster Wheeler 24.00 psf Two-year sub-lease from MCI Worldcom with an option at year 1 Ascot House (Building 5), Maidenhead 2,450 26,346 Quest Technologies 21.75 psf Sub-lease from Nortel for five years with 14 months rent-free Office Park, Maidenhead and a further rent-free if lease is extended Marlow International Business Centre 2,440 26,250 Veolia 6.24 psf Reduced rent for first five years of the term, in lieu of Marlow rent-free period Building D, Sefton Park, Slough 2,640 28,400 Siemens 26.23 psf Taken on assignment from IBM, expires 2013 Ashwood, Crockford Lane, Chineham 2,645 28,460 Tyco Holdings 15.50 psf Taken on a lease from Global Crossing expiring in 2021 Business Park, Basingstoke with a break at 2016 and 24 months rent-free Gateway, 29 The Quadrant, Richmond 3,020 32,565 Reed Exhibitions 28.50 psf Taken on a ten-year lease from St Martins Property Corporation with 18 months rent-free Wellcroft House, 9 Wellcroft Road, Slough 4,500 48,556 Reckitt Benckiser 20.00 psf Occupier surrendered a lease on the ground and first floors and took a 10-year lease of the whole building with 18 months rent-free and a break at year five Building B, Bracknell Boulevard 4,800 51,516 Siemens 22.50 psf Taken on a lease from Prudential (also took 21,000 sq ft in Bracknell Building A) with 12+ months rent-free Marlow International Business Centre, 7,345 79,060 Dun & Bradstreet 19.75 psf 15-year lease with five-year break, 18 months rent-free and Marlow reported capital contribution of 250,000 from Akeler The Matrix, Globe Park, Marlow 7,500 80,540 Chelton 17.50 psf Taken on a lease from Morley expiring in 2026 with Electrostatics 33 months rent-free 2
Lack of choice has contributed to low activity rates in West London. Only 15,800 sq m (170,000 sq ft) of Grade A stock was let in West London in the first six months of 2006, compared to 41,500 sq m (446,000 sq ft) in the final six months of 2005. Businesses remain reluctant to make large commitments but we expect this position to change over the coming year given the upturn in the business investment component of GDP. Take-up by Business Sector In the first half of 2006, 33% of take-up in the Western Corridor was by IT or telecommunications companies. This supports the trend of a resurgence in activity in these technology businesses, not necessarily from expansion, categorised as Other Manufacturing. The business services category includes serviced office operators and businesses such as Reed Exhibitions which took 3,020 sq m (32,500 sq ft) in Richmond. Demand Current demand increased by 3% over the first half of 2006, reaching 464,500 sq m (5 million sq ft) of which 132,500 sq m (1.5 million sq ft) was from new enquiries. Media organisations (broadcasting and publishing) and the public sector (Home Office, police, housing associations etc) were strongly represented and an increase in the security and immigration services have fuelled new demand around Heathrow. Figure 2 Western Corridor Take-up by Sector % Figure 3 Office Occupier Demand in the Western Corridor 1998-2006 000 sq m Business Services 13% Chemicals and Pharmaceuticals 2% Financial Services 8% Food, Drink and Tobacco 5% IT 12% Other Services 7% Other Manufacturing 13% Professional 6% Telecommunications 21% Transport 3% Utilities/Engineering/Energy 6% Wholesale/Retail 4% 1,400 1,200 1,000 800 600 400 200 0 Q1/2 Q3/4 Q1/2 Q3/4 Q1/2 Q3/4 Q1/ 2 Q3/4 Q1/2 Q3/4 Q1/2 Q3/4 Q1/2 Q3/4 Q1/2 Q3/4 Q1/2 1998 1998 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 Historic Average but more from consolidation and rationalisation. Chelton Electrostatics acquisition in Marlow and Siemens lettings in Bracknell (where it came out of serviced office space after five years) and Slough, are testament to this trend. There were also several substantial lettings to more traditional manufacturers Johnson and Johnson and Reckitt Benckiser amongst them, which made up the 13% 33% of take-up in the Western Corridor was by IT or telecommunications companies. IT and telecommunications businesses accounted for almost 20% of new demand and the presence of media operators has also been rising in recent years in West London, with BSkyB, based at Brentford, and the cluster at Chiswick Park both attracting related businesses around them in addition to the long-established occupiers around Shepherds Bush. Furthermore, legal and professional sectors are expanding as a result of the improving fortunes of their clients in the region. Ernst & Young, Shoosmiths, Osborne Young and Pittmans have all been active around Reading Town Centre. 3
Sources of Future Demand There is no evidence at present of an emerging event or sector that will create a significant wave of new property demand in the market. There is, though, a growing need for businesses to respond to innovation and change in their own markets. This, together with the continuing drive for workplace efficiency and cost reduction, as well as a raft of new regulation, is likely to stimulate companies to consolidate, upgrade and rethink business space. The most significant driver of demand for office space over the next five years is thus likely to be corporate churn and acquisition, rather than net expansion. Our research on the sectors and sub-sectors in which change is most likely to take place, and hence the future sources of demand for office space, highlights three opportunities for the Western Corridor which will drive future occupier demand. Polarisation The technology sector will continue to be a major force in the Western Corridor. Innovation in products and methods of delivery will necessitate change and hence create demand. We anticipate further polarisation whereby the biggest players, such as Cisco, Siemens, Nortel Networks and Motorola, will get bigger. This will be driven by their need to service the largest corporate clients and achieve the economies of scale necessary to undertake R&D. This will challenge the smaller, niche players in the technology sector and force them to consider collaboration, joint working or merger. The smaller operators will remain potential takeover targets for the dominant firms. For property, we therefore expect the largest firms to continue their demand for the traditional, large floorplates and high-spec space. However, erosion of the middle tier will drive a need for smaller multi-let space to accommodate niche players. There is no evidence at present of an emerging event or sector that will create a significant wave of new property demand. Convergence To some extent convergence is already evident within the IT sector, with the steady blurring of distinctions between software, hardware and IT services. However, convergence is also becoming increasingly likely between companies in different sectors, for instance, IT, telecommunications and media companies as seen in the recent acquisition of Easynet and MySpace by BSkyB. This collaboration is driven by the need to make best use of existing technologies; to ensure that the high levels of R&D and product assembly created during the 1990s and early part of this decade are fully utilised. As a result, there should be increasing levels of interest in the Western Corridor from traditional media sector occupiers as they work more closely with technology companies. The obvious example is the delivery of TV broadcasting through broadband. The traditional outfall of M&A activity will result in consolidation and the need to reassess corporate property holdings. Perhaps, more interestingly, we anticipate an increased need for projectled space to accommodate the new staff and project staff needed to service collaboration and partnering. It may be that this space is only needed in the short term and will provide a challenge to landlords as to how best create this flexibility. Emerging Markets Businesses formed in emerging economies will increasingly seek representation in the UK. The Western Corridor is expected to capture significant numbers of such occupiers, drawn to its existing technology cluster and associated skilled workforce and business infrastructure, as well as its accessibility to international markets via Heathrow Airport. IT and pharmaceutical businesses are the most likely sectors to experience such expansion. The recent arrival of Chinese telecommunications company Huawei serves to exemplify this emerging, albeit relatively small-scale, trend. Evidence is also beginning to emerge of a rising influx of new IT businesses from the US and Asia which are deciding to establish themselves in the UK in the Western Corridor. The serviced office market will be an obvious choice for this inward investment and the recent announcement that Regus is seeking 100 additional sites across the UK certainly serves to exemplify its confidence in this market. 4
Supply West London experienced a slight increase in supply over the first half of the year and the Thames Valley experienced a slight decrease. This led to a negligible 2% overall rise to 882,550 sq m (9.5 million sq ft) but vacancy rates for the region as a whole remain at 13% overall and at 7% for Grade A space. These statistics, however, mask emerging pockets of prime space shortages in the most sought after locations. New buildings brought to the market were: Building 5, Chiswick Park, at 13,000 sq m (140,000 sq ft); the newly refurbished Commonwealth House (Metro Building), Little speculative development is underway in the Western Corridor. 9,567 sq m (103,000 sq ft) and Bakers Court, Uxbridge, providing 9,572 sq m (103,000 sq ft) also commenced this year. We expect to see a decline in supply by the end of 2006, given steady take-up, little speculative development underway and businesses continuing to withdraw space for re-occupation. Figure 4 Office Supply in the Western Corridor 1996-2006 000 sq m Figure 5 Vacancy Rates in the Western Corridor 1996-2006 % 700 600 500 400 300 200 100 0 1996 1997 1998 1999 West London Total 2000 2001 2002 2003 Thames Valley Total 2004 2005 H1 2006 18 16 14 12 10 8 6 4 2 0 1996 1997 1998 Vacancy Rates A 1999 2000 2001 2002 Vacancy Rates A&B 2003 2004 2005 H1 2006 Hammersmith at 8,400 sq m (91,000 sq ft); and 2,300 sq m (25,000 sq ft) back on the market at Eyot Gardens House, (also in Hammersmith). In addition, The Ark in Hammersmith is being refurbished and will deliver 14,864 sq m (160,000 sq ft) in 2007. The marketing of Hyde Park, Hayes (currently under refurbishment) offering Development Little speculative development is underway in the Western Corridor; just 44,343 sq m (477,304 sq ft) across six projects. Just four of these are over 4,645 sq m (50,000 sq ft) and only one, Building 4 at Chiswick Park, is larger than 9,290 sq m (100,000 sq ft), although Lakeview, on Table 2 Projects Under Construction in the Western Corridor at July 2006 Building Name Size Size Estimated Developer Comments (sq m) (sq ft ) Completion Date 200-250 Fowler Avenue, Farnborough Business Park 7,254 78,080 Q3 2006 Slough Estates Two buildings Cirrus, Aerospace Boulevard, Aeropark, Farnborough 7,432 80,000 Q3 2006 Terrace Hill Group Courtyard development of 15 units Waterside House, Riverside, Uxbridge 1,976 21,272 Q4 2006 Slough Estates Two-storey building Building 4, Chiswick Park, Chiswick 15,329 165,000 Q1 2007 CHISPUT Commenced June 2006 Room 404, Norrey's Drive, Norrey's Park, Maidenhead 3,087 33,228 Q2 2007 Kenmore Investments Two-storey development 1410,1420,1430 Lakeview, Arlington Business Park, Theale 9,265 99,728 Q2 2007 Arlington Securities Next phase of Arlington Business Park 5
the Arlington Business Park in Theale is only just under that threshold. The remaining two developments over 4,645 sq m (50,000 sq ft) are being built by Slough Estates and Terrace Hill, both in Farnborough. We expect rental growth rates to peak in 2007 and 2008. Looking ahead, there is growing interest in speculative development as shortages of large units emerge. This has been seen particularly in Maidenhead where record prices are being paid amidst significant competition. Many of these schemes are yet to be finalised and will depend on strong rental growth over the coming 12 to 18 months to ensure viability. This is discussed in further detail in the Investment section (see page 7). Rents Average rents for the region grew by 3% in the year to July 2006 but most of that increase occurred in the second half of 2005 and there has been very little movement since. Three locations have experienced strong rental growth in the 12-month period: Uxbridge, Ealing and Staines/ SW M25, although the top achieved rents are confined to selected locations in these towns. Uxbridge achieved 10% growth, all in the second half of 2005, with the following lull reflecting little scope for rental growth given the paucity of supply. Hammersmith and Chiswick still lead the rent table at 33.50 per sq ft although Maidenhead is close behind at 31.00 per sq ft. Hammersmith and Chiswick are both subject to the effects of high rents in the West End of London which are putting pressure on occupiers to look elsewhere for a lower cost but still accessible location. Looking ahead, we forecast that most markets in the Western Corridor will experience an acceleration in rental growth, averaging just over 4% per annum over the period 2006-2010. This will be driven by continued improvements in economic growth for the South East region and the recovery of sectors such as IT which were the previous drivers of growth. The pharmaceutical and media sectors will also provide further impetus to rents. Given the economic fundamentals and our expectations for business sector expansion in the region, we expect rental growth rates to peak in 2007 and 2008 with Hammersmith and Maidenhead forecast to show the Figure 6 Grade A Rents in the Western Corridor June 2005-June 2006 % Uxbridge Ealing Hammersmith/Chiswick Heathrow Brentford Hounslow Staines/SW M25 Slough/Iver/Langley Windsor Marlow/High Wycombe Maidenhead Camberley/Farnborough Bracknell Basingstoke Reading 17 19 21 23 25 27 29 31 33 35 June 2005 June 2006 6
greatest annualised average uplifts of between 4.5% and 5% over the 2006 to 2010 period. After a stagnant period, Stockley Park will also show strong growth peaking in 2007-2008. Investment The Western Corridor continues to show weaker returns than the UK office sector as a whole but the degree of this underperformance is diminishing as occupier strength returns to the market. According to Investment Property Databank (IPD), total returns for the 12 months to the end of June were 18.0% in the West London market and 19.2% in the Thames Valley. This compares to nearly 24% for all UK offices, although this return is heavily influenced by Central London. Over the last six months, returns from West London offices have remained broadly stable at 8.6%, while in the Thames Valley they reached 15%, driven by a hardening in yields. It is evident from Figure 7 that the inward yield shift, a characteristic of the entire property market, was slower to materialise in the Thames Valley market than in West London, which has seen a steady hardening in yields since 2003. This reflects the fact that the fall in rents has not been quite as marked in this market, but more significantly signals the expectation of greater rental growth prospects, given the greater relationship with Central London offices, as well as the current and forecast performance of this market. The yield shifts seen across the Western Corridor reflect the weight of money in the market and strengthening investor confidence in rental growth. Grade A offices remain highly sought-after in the market, thus maintaining the downward pressure on yields. This is Figure 7 Initial Yields in the Western Corridor Relative to the UK Average 1998-2006 % 11 10 9 8 7 6 5 4 1988 1991 1994 1997 2000 2003 2006 West London Offices Thames Valley Offices All UK Offices demonstrated by the sale of Lakeshore, a 25,350 sq m (272,800 sq ft) modern headquarter building with good parking provision, at Bedfont Lakes at a yield of 4.77%. This confirms our current prime yield for the Western Corridor of 5.00%. Given the continued weight of money seeking product in the Western Corridor, interest in the secondary market remains high and investors are increasingly moving up the risk curve to achieve yield. While 12 months ago investors were focusing on assets with ten to 15 years remaining on the lease, there is a growing interest in properties with three to ten years remaining. This is illustrated by the sale of Beech House in Reigate, let to Kimberly Clark with three years remaining, at a yield of 6%. The demand for a high running yield is also stimulating investor interest in over-rented properties. The Prudential Campus in Reading, with a lease of 9.5 years to the Prudential remaining, was purchased for 6.18%, reflecting an over-rented position of 29.00 per sq ft compared to a headline ERV of 24.00 per sq ft. The Table 3 Total Returns in the Western Corridor Annualised over the last: 1 year 3 years 5 years 10 years 15 years West London 18.0% 13.0% 8.6% 12.4% 9.8% Thames Valley 19.2% 13.1% 7.5% 11.2% 9.6% All UK 23.8% 15.7% 11.4% 12.3% 9.7% Source: IPD The yield shifts seen across the Western Corridor reflect the weight of money in the market and strengthening investor confidence in rental growth. 7
Town centre offices in the Western Corridor continue to attract a premium. same search for yield is driving increased interest in speculative development. Prices paid no longer attract the yield discount seen in the market 12 months ago. This depth of investor interest in the Western Corridor office market is underpinned by strong expectations of rental growth recovery. Given our forecasts of average rental growth of just over 4% across the Western Corridor market, albeit with significant variations within, we see potential risks to current pricing given the rent assumptions made in some transactions, particularly in the secondary market. This risk is likely to be compounded by the impact of the recent and anticipated interest rate rises on geared investors. As a result, while we expect yields in the prime market to remain robust over the next 12 months, we anticipate secondary yields will drift outwards by up to 25 basis points (bp). Figure 8 Historic Total Returns in the Western Corridor 1995 to 2006 % per annum 30 25 20 15 10 5 0-5 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 (Pro Rata) West London Thames Valley All UK While there are risks in the secondary market, business parks still offer potential buying opportunities. Town centre offices in the Western Corridor continue to attract a premium compared to business parks, other than prime examples such as Stockley Park. This reflects the appeal for occupiers offered by transport infrastructure and amenities for staff. The pricing discount of 100 to 125 bp for parks, relative to town centres, has narrowed over the last year and now stands closer to 50 to 75 bp. In markets where supply is becoming tight it is likely the parks will be Table 4 Key Investment Transactions in the Western Corridor January to June 2006 Building Size Size Purchaser Reported Estimated Initial Comments (sq m) (sq ft ) Price ( m) Yield (%) Lakeshore, Bedfont Lakes 25,350 272,800 Evans Randall 156.00 4.77 Let to Cisco Systems Ltd at 29.85 psf with 19 years remaining. 2.5% fixed annual increases Prudential Campus, Reading 13,991 150,600 Oppenheim 66.00 6.18 Over-rented at 29.00 psf to Immobilien KAG Prudential with 9.5 years remaining Rivermead, Uxbridge Road, Uxbridge 4,180 45,000 Legal & General 23.75 5.25 Let to Compass Group at 27.55 psf with 15.5 years remaining Thameside House, Staines 3,466 37,300 Royal London 13.15 6.38 Let to Bupa at around 24 psf for a Asset Management further nine years Minerva House, Reading 5,562 59,870 Helical Bar 12.11 6.80 Let to Axa Insurance at 14.55 psf (Gresham REF II) expiring in 2008 Kings Wharf, Reading 2,480 26,700 Oppenheim 10.30 5.38 Let at approximately 22.00 psf Immobilien KAG with 12 years remaining Wellington Business Park, Crowthorne 3,452 37,150 Henderson 8.85 7.00 Let to Citicapital at around 24.50 psf until 2017 Beech House, London Road, Reigate 1,520 16,400 Poland Properties 6.60 6.00 Let to Kimberly Clark at 28.65 psf with 3.8 yearsremaining 8
better placed to accommodate larger occupier requirements, which we predict will grow over the medium term. We therefore expect the discount to be eroded further over the coming year for the better business park locations. Outlook The Western Corridor has seen a return of confidence with a series of high-profile lettings and evidence of rental growth pressures. Looking ahead, we expect the occupier market to strengthen further, driving rental growth averaging 4-5% per annum, over the next five years. However, we do not foresee the emergence of a new source of occupier demand that will have a structural impact on the market. Rental growth will therefore rely largely on corporate churn. This will place greater emphasis on the quality of the assets in terms of the suitability of the space, location and facilities, including parking provision. Town centre locations, offering a diversity of space and public realm, are well placed to benefit, although given the paucity of new space in many centres the corporate need for larger units is likely to refocus attention on quality business parks. The investment market has preempted the upturn in the occupier market with a resonant impact on values. The investment market has pre-empted the upturn in the occupier market with a resonant impact on values. Further hardening in yields is expected in prime segments of the market, underpinned by expectations of real rental growth. However, given the positive but unspectacular outlook for rental growth over coming years, there are questions over the sustainability of pricing in selected segments of the market. Overall, however, we are positive about the prospective returns to be achieved for quality assets in the Western Corridor market over the next five years. 9
Western Corridor Team Contacts: John Izett Director, National Offices Tel: +44 (0)20 7399 5977 E-mail: john.izett@eu.jll.com Guy Parkes Director, National Offices Tel: +44 (0)1344 383555 E-mail: guy.parkes@eu.jll.com James Finnis Director, National Offices Tel: +44 (0)20 8283 2534 E-mail: james.finnis@eu.jll.com Mark Wilson Director, National Investment Tel: +44 (0)20 7399 5874 E-mail: mark.wilson@eu.jll.com Mark Routledge Director, National Investment Tel: +44 (0)20 7399 5814 E-mail: mark.routledge@eu.jll.com Sue Foxley Head of UK Research Tel: +44 (0)20 7399 5402 E-mail: sue.foxley@eu.jll.com This survey is prepared by the UK Research team in conjunction with the Agency and Investment teams. West London Grantley House 9 Park Lane Cranford Middlesex TW5 9RW Tel: +44 (0)20 8759 4141 Thames Valley 2 Milbanke Court Milbanke Way Bracknell Berkshire RG12 1RP Tel: +44 (0)1344 869090 London National 22 Hanover Square London W1A 2BN Tel: +44 (0)20 7493 6040 Other UK Offices: London City Birmingham Leeds Manchester Norwich Edinburgh Glasgow www.joneslanglasalle.co.uk COPYRIGHT(C)JONES LANG LASALLE IP,INC. 2006 This report is intended for general information and is based upon material in our possession or supplied to us, which we believe to be reliable. While every effort has been made to ensure its accuracy and completeness, we cannot offer any warranty that factual errors may not have occurred. Jones Lang LaSalle takes no responsibility for any damage or loss suffered by reason of the inaccuracy or incorrectness of this report.