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Circumspect corporate occupiers take stock

Jones Lang LaSalle’s latest corporate occupier research reveals shift back to caution and introspection

Jones Lang LaSalle’s Q3 2011 EMEA Corporate Occupier Conditions research reveals stable activity levels but increasing cautious behaviour by corporate occupiers. Overall take-up in Q2 2011 was 2.7 million sq m, up 2% on the previous quarter and 4% compared to Q2 2010. However, expectations for full year activity remain in line with levels experienced in 2010 at 11.7 million sq m. This is in stark contrast to the emergence of some expansionary demand in the opening few months of 2011.
Vincent Lottefier, CEO of Jones Lang LaSalle’s Corporate Solutions EMEA team commented: “Although there has been strong performance in Germany, France and the Nordic region, the European [and USA] sovereign debt crises have unsettled everyone. Headcount is under pressure, M&A activity becoming uncertain and long-term sustainable growth increasingly looks challenging. Corporate Real Estate (“CRE”) leaders across EMEA are therefore re-visiting their growth plans, focusing on fundamentals and parking non-essential projects.”
Dr Lee Elliott, Head of EMEA Corporate Research added: “Despite the more cautious tone amongst corporate occupiers presently, market dynamics will remain challenging when confidence returns. Although the European vacancy rate remained in double digits for the eighth quarter in a row, the reality is the markets present a dearth of quality solutions to corporate occupiers. New completions have also fallen off a cliff thus presenting little short-term salvation. Only 670,000 sq m has been completed across the region, 50% below the long-term average. The full year will see the lowest completion volume in more than a decade, so prime space will continue to be at a premium as occupiers recommence expansion or space upgrading plans.”
Added Lottefier: “Corporate boardrooms continue to focus on limiting risk whilst improving productivity. The challenge will be to balance this with delivering long-term real-estate strategies. We will see more transformation projects across existing property portfolios as these are easier to delay or stop compared to big-ticket deals. CRE leaders will also outsource more to service providers to tackle their diverse challenges. “