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A look at the office space market in 2014

Posted by Mark
June 19, 2014 in Features

Forecasters expect the global office space market to recover strongly in 2014, after two years during which renting activity has been relatively low.

There has been evidence that the demand for space is building all over the world, as the economy picks up and business confidence rises. According to the commercial property and investment firm JLL office space, leasings should be around five to ten percent greater than they were in 2013, with the biggest increase seen in the Asia Pacific region. An upturn in the office space market is also expected in Europe and the United States.

In Western Europe, most office space markets have seen a more active first quarter in 2014 than they did last year. In fact, the take-up of office space in London has been so great that it has reached the highest level seen since 2000. There are also signs of healthy markets so far this year in Germany and Spain, while in France, Paris has already seen activity soar by 19%.

A European preference for new buildings

European businesses seem to be following a growing trend to sign up for modern, new office spaces in areas where accommodation is hard to find. The amount of pre-let space seen so far on the continent in 2014 suggests that businesses are prioritising new properties that can improve their productivity, as well as adding value to their companies through an office fit out.

Worldwide, there are expected to be 30% more office buildings completed in 2015 than there will be in 2014, suggesting that a steady growth is now taking place in the supply of office floors. As well as Europe, the United States has also witnessed more office construction beginning to occur this year, with an increase in 18.5% during the first quarter of the year.

Development activity is strongest in London

Of all the cities in Europe, London seems to be experiencing the greatest rise in the construction of new office space. At the beginning of 2014, the growth of the city’s media and technology companies led to a higher demand for offices and take-up reached levels not seen since 2006. In January, over a third of the new office space being developed in London had already been let.

By February this year, it was reported by UK commercial property consultants CBRE that the regional demand for office space in Britain was also increasing, hitting its highest level since 2008. Cities such as Birmingham, Leeds, Edinburgh and Glasgow all showed strong performances in their office space markets, indicating business confidence in the UK was continuing to improve.

CBRE have suggested that, as the economy recovers, speculative developers could do well as the demand for office space continues to increase. On a global scale, JLL predicts that Singapore will see the biggest rise in office space rentals during 2014, but London, along with Dubai and New York, will also be one of the cities that should see a large upturn in its office space market.

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