2014: A time of action for occupiers?

Moved into new home in October (after many months waiting in a housing chain..).  Enjoying doing it up and unleashing my ideas on interior design. There is only one thing that obviously lets it down now in my opinion – the kitchen (which only loosely meets the definition of the word).  Obviously for me as with most people money is definitely an issue, especially after all the start-up costs.  A few years ago I would not have contemplated such a big spend.  But now, with housing prices on the up and the jobs markets looking more buoyant I am feeling the confidence to take this step and invest further in the property – after all it is not wasted money as it can be realised at a later date.

I mention my circumstances only in as much as I believe corporate occupiers are now also starting to share the contagious optimism that is going around. According to a recent study from Deloitte, business optimism is at the highest level for over three years with many CFO’s believing now is a good time to take risk as perceptions of financial and economic uncertainty have reduced.

Confidence is returning to the UK economy as has rising corporate expectations.  With these twin drivers in evidence, we anticipate strong, sustained levels of occupier demand going forwards. This is already very much in evidence in the Central London office market.  Demand has grown strongly in the last 6 months and active requirements remain above average despite a recent surge in take-up.  We are seeing less occupier inertia and a stronger relationship between active demand and realised take-up.  In relation to the sectors –TMT is still dominating occupier activity. However demand is increasingly broad and financial services occupiers – the traditional pillar of the Central London office market, are now beginning to return. Higher take-up from this sector also looks in prospect for 2014.

In addition, we have seen increased evidence of investor activity in the regions and in terms of occupier activity we have also witnessed Deutsche Bank take sizeable space in the Birmingham market – which could be indicative of a new phase of decentralisation / relocation activity.  Time will tell…

I would just add one cautionary note to this tale of optimism… so far economic recovery has been mainly consumer / housing market led. However consumers are still heavily indebted and therefore for a sustainable recovery corporate investment will actually be necessary.  The signs are definitely there though in my opinion.

So 2014 may well be year when many decide to take firm action to realise future real estate strategies.  It will also be a time for me to start cooking again!