JLL on the Future of Offices: Rents, Regions & Reality

How are office markets evolving across the UK — and what’s really driving rents, demand and regional divergence? 

In this episode, JLL’s John Woodger and James Devany join hosts Ashley Toy and Tom Sharman to cut through the noise. They compare trends across London and key regional cities, explore shifting occupier expectations, and reveal what these changes mean for the future of UK offices.

NB. This was recorded on 27 January 2026. 

Transcript

SPEAKER_03 0:00

The space has changed. Yeah. And we've used a lot of the data from the digital technology that we put into the space to justify that. So I do think there'll be more kind of creative thinking about how people occupy space.

SPEAKER_00 0:11

Desk rates are competitive, but again, it's it's become more focused around core locations, close to stations. I think if you go out to again some of those peripheral markets around central London where there are, where service office providers have got space, I think they're they're struggling.

SPEAKER_02 0:28

Welcome back to Property Perspectives. I'm your host, Ashley Toy. I'm joined on this series by Tom Sharman, our head of research and strategy. And today we have John and James in from JL. Welcome guys. Um I think today's episode we'll be talking about office, but sorry, John, a bit of a background and um where you got to for here.

SPEAKER_00 0:46

Thank you very much for having us. John Woodger, I lead the city capital markets team uh for JLL. I've been at JLL for nearly 16 years now, started as a graduate and spent most of my time working in the central London market. I've spent some time working overseas for um for the business as well, um, but sort of back in London and um yeah, and and I've focused there for the last sort of 10, 12 years since being being away. So I'm trying to count back 16 years, John. Where does that where does that take you to? Just coming out of the just coming out of the gear. It was 09. So um yeah, an interesting time to get a graduate job, but we sort of saw the saw the worst of it, and then uh and then things start to recover, and you know, that's sort of equipped us all for uh the change in you know the sort of end of the last cycle and the the sort of bottoming out of the market and the re-emergence that we're starting to see now, which is all encouraging. Indeed.

SPEAKER_03 1:39

Yeah, um so James Devanny, I I lead the office leasing and and uh occupier advisory services up in Manchester. Um I've been at jail 11 years. Um yeah, I mean I work across kind of Manchester but closely linked up with our regional teams across the big regional cities. Um, and then prior to that, as we were discussing earlier, I was um at Popco Bruntwood um in Manchester about five years, which was um yeah, great insight into the the stuff that that those guys do and and do well. And then prior to that, you might guess from the accent, uh it's northeast, so yeah, five years over in the northeast working for a consultancy, yeah. Sandersonweather over there. So that's yeah, that's my background.

SPEAKER_01 2:18

Yeah, we wouldn't have got it from the accent, of course. How for you, Clay. How much has Manchester change at the time that you've been there?

SPEAKER_03 2:24

Unbelievably so. So I came across in 2010, and I would say the city is unrecognisable in some in some way, in a really positive way. Um, the amount I mean, you could just look at I mean, look at the the southern part of the city, uh Deansgate Square, the skyscrapers there, some people call the Manchester Dubai. Um but yeah, so the res just changed hugely. Um, but I mean that's because of the amount of inward investment we've seen into the city, people living in the city now. Um I mean, pandemic has probably got a little bit to that. We had quite a I mean, just anecdotally, we've got friends nearby us that have moved up from London, uh made that change, decided to get out of London and come up to the northwest. Um and yeah, just Manchester's had a real kind of um strong last five to ten years.

SPEAKER_01 3:11

I think a lot of a lot of places can learn from Manchester, I think, in the way that they've kind of driven growth.

SPEAKER_02 3:16

So I guess we can take that out to the the broader big cities then. Uh how does it compare and contrast at the moment?

SPEAKER_03 3:22

Yeah, I mean, uh at the moment the big six cities from a from a as I suppose from an occupational side, we look at take up. Um and looking back over the last couple of years, we've seen pretty robust take up. Um I mean Manchester, not wanting to focus too heavily on Manchester, but it does lead the way um in comparison to the other cities. But even still you you're seeing kind of good levels of take up and from Bristol and Birmingham and Edinburgh. So I think where we're at now is that where a lot of those cities have seen good levels of supply, the issue we've got now is this constrained level of supply due to lack of and lack of kind of or challenges around liability and to bring forward new new skills.

SPEAKER_01 4:05

But the constrained level of supply in in the a relatively so in the better, more modern start, right?

SPEAKER_03 4:11

So it's exactly so I'm not I'm not sure whether this is true of Manchester, but kind of more broadly as the the regional markets, you have this kind of dichotomy of quite a lot of overall supply, but but very little as the kind of modern So the best way to evidence that in Manchester is if you looked at overall vacancy, depending on which numbers you look at, but if you look at our numbers, you're at around kind of nine percent, nine to ten percent over overall. But if you look at best in class, new build, you're still one percent.

SPEAKER_01 4:38

And are those those dynamics the same in London? I mean, I I get a sense, you know, from a kind of generalist perspective, which is my perspective, that that London is slightly ahead in terms of investment market liquidity. So there's a little bit more kind of activity coming in, but but from a supply perspective, is it the same picture as well?

SPEAKER_00 4:55

Well, the numbers are the same. I mean, overall vacancy for London, including everything, is just just below nine, so eight point nine. Um, and then new build all significantly refurbishes 1.2%, so almost spot on. So I think the dynamics are are absolutely the same. I think that you know the the the development equation, the viability is still really challenging, even when we're talking about West End rents at 200 plus, city rents getting to 100 plus now. Even with those rents, I guess we've seen such a change in the cost environment, the cap rate environment, the financing environment, that you know, those three elements sort of pointing in the wrong direction or having pointed in the wrong direction for the last, let's call it three years, uh you know, the rent the rental side is not enough to you know to support that sort of decision around should we go and build. Okay.

SPEAKER_01 5:47

So the the things, you know, I I read in the in the press, you know, that you see this this rent 104 pound of the city or 10 whatever it may be, and you think, okay, that's for somebody who remembers when 60 seemed to be a ceiling, you know, that seems pretty staggering. Presumably those rents are being achieved in schemes that you know the spay first went into the ground in 2019, you know, and you're now you're kind of now seeing those come to market. So so presumably, you know, is there then you know, are there more schemes coming through in the pipeline over the next couple of years, or are we going to really hit a uh kind of a hole?

SPEAKER_00 6:20

I think the well, we'd love to hit a hole in the sense we'd love to see more holes being dug and more buildings being built. Um I think we we see that we see that new build supply, that 1.2 trending downwards. You know, because there are have not been enough development starts. A lot of the space that is coming out of the ground is already already pre-leased. If you think about last year, British Land and two Finchbury Avenue, Citadel taking that, you know, that huge pre-lep. Um we've just seen Herbert Smith sign um at Broadgate. Uh that building hasn't even that's a major refurbishment. That building is yet to start. So that's I didn't recognise the picture when I saw it. No, exactly. It looked it looks uh slightly different to what the building that sits there today, but you know, they are you know they are pretty much truly off-plan, off-plan prelets, and we're gonna start to see more of that. So the pipeline that's coming through and being delivered, a lot of the space is never hitting the market because it's already been absorbed by by the prelate market. Um and we've got I think we've got over 20 requirements in the market, over 100,000 square feet across London. Okay. Um, so you know, there is significant pressure on the pipeline. The change that we saw last year, and I think we'll see that theme, and it's one of our sort of predictions for this year, is the starting, the loosening of the of the pipeline. And as we know, real estate, you know, development takes a long time to get built, planning, you know, just the pure delivery of these schemes. But we saw a couple of development schemes change hands last year, i.e., fresh capital coming in, either purchasing sites or fresh or capital coming in on a kind of joint venture basis. And you've got to believe that by recapitalizing those assets or or selling those sites, that those schemes then get pushed through and commenced. Some occupiers are really afraid of signing rents so high at the moment. Um, what we're seeing is a lot more partnership between occupiers and landlords, and how how can we make this work for both parties? You need a new building, we need to go and build it for you. It's got to give us a certain level of return. So we're also seeing, in order to for the cap rate piece of the equation to work, we're seeing leases get longer again.

SPEAKER_01 8:26

Okay.

SPEAKER_00 8:26

So a lot of these pre-let deals now are minimum 15 years, and some are pushing to 20. We're seeing first rent reviews having some form of fixed uplift, guaranteed, you know, some form of guaranteed income performance. One of the other reasons that leases are going out is fit-out costs have become so high. So tenants need that time to amortize those fit out costs. So if you remember pre-COVID and when WeWork was doing its thing and the disruption of the market was going on from a sort of leasing perspective, leases were getting shorter, you know, everyone wanted more flexibility. I think the flexibility point is still important. Yeah. So we're seeing on these pre-lets, you might sign a 20-year prelet, but maybe some of the space will have, you know, some of the floors will have break options in them. But for landlords, it means that they can start to tweak the development equation so that they are motivated to go and build and everything doesn't have to go through through the rents. But as I said earlier, financing costs are moderating, and I'd say more than moderating, coming in pretty quickly. Yeah. Margins are squeezed, even even for spec, spec development.

SPEAKER_01 9:32

Um you mentioned there sometimes the the kind of fixed uplifts on 5B. So that effectively, I guess, to a certain extent gets around the upward-only rent review um challenge. Yeah.

SPEAKER_00 9:43

Um or the lack of thereof. Yeah, and I mean we've I don't know about you, we've it was announced, it was a bit of a shock when it was announced. We it was sort of debated, it's all obviously gone quiet and it's sort of going through the system. I think there's a general consensus view that it's unlikely to happen and a one size fits all. Okay. And that's not a house view, but that's a sort of general market view. It's the feeling, I think, in that. Yeah. Uh and it's not, yeah, I think I think it suits certain other sectors, but I think the office sector it certainly doesn't suit.

SPEAKER_01 10:14

Yeah, it it was it was dressed up. I I can't remember the name of the the bill, but it was very much kind of dressed up as high street, wasn't it?

SPEAKER_00 10:21

So I think that's what they had in mind when they were thinking of it. Yeah. Um I think there's enough other headwinds in the market for people to worry about that at the moment. And and we've seen no you know, normally when those things get announced as a shuttle, you know, things come in with without people expecting them. You generally see deals wobble or stall, or you know, when Trump's tariffs came in last year, we saw a few deals sort of get paused and go back to investment committee and they ended up getting done. But around the rent review point, we've we've saw nothing halt. Yeah.

SPEAKER_01 10:49

The irony really is in high streets typically you don't get to the point where there's a rent review, your leases will typically be five years. Yeah. Yeah.

SPEAKER_02 10:55

Um So I guess just thinking about a lot of the stuff we've talked about there is de-risking from not from both sides of the equation. Um, but also rents kind of continue to push to make things viable. Does that change, I guess, occupier uh focus? So do you think people will start moving to slightly alternative areas?

SPEAKER_03 11:15

Yeah, it's an interesting question. Um everything that John's just said is relevant to the regions, just in a different on different on a different scale from that supply-demand, where the rents are going. Um I do feel that look in Manchester and across the big six, the next new builds that will come forward and be delivered will be 55 to 60 quadrus square foot, which is quite a big jump from where the rents are currently at 45. Or the mid-mid forties, yeah. 45, yeah. So 45, maybe over the next six months we'll see 48. Might be a pre-let dropping this year that could end up being 55 to 60. So there's quite a big jump there. Um now the conversations that we're having on the occupier side, those those questions are coming up around wow, that's a significant jump from where we are. Yeah. The conversation then about regays comes in. Yep. But then the suitability of the building um and the specification of the building they're in comes up for debate, and the modernization of that building that they may need, especially if you're a big corporate and you have to hit some of these sustainability targets that are um scientific targets that big corporates have signed up to. Um however, I get the impression or we get the feeling from the the corporates that were speaking to them with some big lease events that are coming up, that they appreciate that the it's just gonna be that's just gonna have to be a fact of life. If they want to be in the best quality building, if they want that kind of retention, recruitment draw and pull, and that they need to hit those scientific targets.

SPEAKER_01 12:47

If you make the decision to move with all the costs inherent in that, and you you know what element do you compromise on? As you say, you want to have the building fit for modern working practices. You you equally want to be in a location where you've got all the immunities around, so your workforce is you know, wants to come in and wants to work for you. So you can't really compromise on spec and you can't really compromise on location. So as you say, sometimes you kick them down the road and just you know re-regear where you are. How about um you know refurbs? Again, from a kind of you know generalist perspective, I look at it and say, okay, if you need £55 in Manchester to to build from the ground up, what do you need or can it work to do a full kind of refurb, or is it just as expensive?

SPEAKER_03 13:29

Well, kind of large-scale brown to green refurbishments as we refer them to, the rents aren't that far behind. So there is there is a discount. Um but again, some of the interventions that you're seeing on some of these big significant assets, um it means that uh the CapEx is big. Um we're working on a couple of buildings in the city at the moment um in Manchester where you're seeing some quite chunky numbers come back. Um but I think especially if you can get your hands on something um that perhaps is close to being VP, then there's I think there's an opportunity there. Look, the re it feels like in that refurbished end of the market, if you're delivering something um with all the bells and whistles you would expect, what's the discount? You may be instead of 55 to 60, you might be 45 to 55 or something, something like that. That's perhaps the di the differential. But you're still getting a really great product.

SPEAKER_01 14:28

Yeah. But if it feels like the raw material of buying a an older asset um with short income should be relatively cheap.

SPEAKER_03 14:37

Yeah.

SPEAKER_01 14:37

Um, but but the the cost of getting from A to B is obviously the the restrictive fact. So so you know, we look at things obviously when you see institutional buyers or or kind of corporate tenants, they probably want BREAM excellent or outstanding or one of these really kind of, you know. But but perhaps other occupiers may be more content with something that is less, you know, less expensive to get to. So is there a demand for that kind of next notch down of stock?

SPEAKER_03 15:07

There's there's I'm definitely seeing a change in viewpoint on sustainability from a sustainability perspective, uh perhaps driven by the DOM as we discussed before. And America, and and the American and the Americans and just some of those American corporates that we're dealing with just have a totally different view on sustainable sustainability in the pecking order of kind of of kind of what an occupier would like to see has definitely moved down. There's JLL do an impact survey of a number of kind of occupiers internationally, and it's probably dropped down to number four or five in the list now. And location um security, interesting, that's probably driven by some of those American organizations, banking, etc., is kind of up there. So it's definitely dropped off. However, a lot of these corporates have still signed up to scientific targets. I mean, look, honest opinion, I think if you're putting Briam in operation and neighbours feels like the kind of the the best kind of solution at the moment, but Briam are also looking at bringing in kind of an operational carbon assessment um process. Yeah, those things you're fully uh you're fully fully electric and you're delivering your building, whether it's referred or you it it to my view kind of is doing a lot there, I think. And it I don't think that would impact your leasing strategy if you weren't, let's say, collecting some of these badges that are out there. I think you need to dig beneath the surface and yeah um to kind of really get into the skin of it and and see what's important to talk about. Okay.

SPEAKER_01 16:33

Touching you touched on um sorry, I go, go you touched on location. It just it just made me think about location. You know, when I started out in real estate, you know, the the central London or the city office market was very much in a certain postcode district, and that's you wanted to be within a certain distance of um bank or wherever it was, you know. Now it feels to me like there's other um uh there's other criteria that are less about traditional core and more about, I mean, I see so so in central London, is is there a move perhaps away or expanding away from somebody's kind of traditional cores?

SPEAKER_00 17:09

I think I think the core shifted north because of the Elizabeth line. Certainly speaking for the city, that you've gone from that sort of you know, the clustering around Bank of England, yeah, that is still the historic core, but I think in terms of talking to occupiers and and the investment market, they they would clearly they would like to be closer up towards towards Liverpool Street. And actually, if you look at the rental performance of assets within a certain walking distance of the Crossrail Elizabeth Line stations, there is meaningful differential. So it's that's flowing through to value on both on the rent on the rental side and ultimately you know on the kind of liquidity capital side. So I think it's shifted. And if you go across to, you know, if you go across the West End, you know, there's a lot of development going on around Bond Street Tube Station, Tottenham Court Road. So I think the core has shifted up. I guess the the West End still has its garden squares of Mayfair, where you're always going to see private capital chasing assets, you're gonna see the hedge funds, you know, the big the big private equity businesses who just want to be on those garden squares. So I think the West End is slightly more nuanced from where from where the core is. Um, but the city certainly we've seen sort of from Moorgate up to up towards Liverpool Street and Broadgate is where there is a real the real clustering, clustering effect. Um I think to sort of go back to the question that uh that James dodged around what will happen, you know, those markets that I guess where the you know post-COVID the tide has gone out a little bit in some of those peripheral markets that were performing so strongly before going into COVID. I'm talking Shoreditch, the South Bank, Aldgate, uh, you know, they were from both a leasing and from uh you know from a capital, from the capital side, they were market, they were in vogue and and and investors and occupiers wanted to be in those locations. Things have changed a little bit. You know, I think a lot of a lot of occupiers have retreated to the new core. Um and therefore we've seen some of those markets suffer a little bit. Um, certainly up that eastern corridor of kind of Altgate, Whitechapel, around there. But yeah, but what we are now seeing is sort of backfilled demand from investors wanting to do change of use, investors and developers wanting to buy offices and change to other uses somewhere somewhere in the in the BEDS world from hotels to co-living to student accommodation. So I think we're fortunate, and again, talking to colleagues globally, that this is not a London phenomenon, it's a UK, it's a global phenomenon, we have too much office space. But thankfully, certainly the likes of the City Corporation, Southwark have been really pro, they've got onto it early, they've spotted that they've got too much office inventory, and they've also recognised that amenity, a mix of uses is actually a positive thing. Whereas Wineback not that long ago, the City Corporation's planning department was very much about this is a place for business, and hotels and all those things can can operate in little pockets, but we're not gonna have hotels in the middle of the city. But you know, you your old building on uh your old building at Princess Street, um, that is going to be a hotel overlooking Bank Junction. And so I think the city, it's got a long way to go, but I think it's gonna become a bit more like the West End in a sense you're gonna have this sort of collision of different uses, which from a you know from my perspective is is only a good thing for both all of us as kind of office attendees, people coming to the city at the weekend, not just Monday to Friday. Yeah, I was gonna say Monday to Thursday, really.

SPEAKER_01 20:41

Uh you know, it's almost like the weekend now is three days in terms of making use of the the the kind of infrastructure in the city, isn't it?

SPEAKER_02 20:48

Yeah, if we've got this far and not talk about occupancy. So I mean uh yeah, it'd be really helpful to just go, I guess, touch on occupancy and we're kind of moving into like what what a what a good asset looks like and where the where the challenge wants to look like as well.

SPEAKER_03 21:01

Yeah, I mean just go just kind of moving. I mean this percinat is here, but just interesting to hear what John was saying there about London and the geographies of that, because there are similarities with the regions, it's just on the different scale again. But you're looking at the city cores of Manchester, Birmingham, etc. And then if you look at those kind of regional outtown markets, that's where you're you're seeing what's happening on those per more peripheral kind of areas of London. So you especially Manchester, where you've got uh historically there's been quite quite a strong regional market without South Manchester, Warrington, etc. peripheries of the city. What we've seen in the last five years is significant movement of those businesses based there into the city centre. Yes. And that's recruitment and retention of talent.

SPEAKER_01 21:42

But maybe in area areas that weren't the traditional city offers core in the city centre.

SPEAKER_03 21:46

So you got exactly so you've got where yeah, you said Manchester's quite a tight, quite tight knit city with the C B D, spinning fields, but now we're seeing what perhaps were regarded as peripheral scheme are now part of the core, which is the like of circle the circle squares of this were the the new bailey's the nomers these kind of they are part of the city now so it's the it's the areas outside of the city that are suffering so the business parks that's where there's that real head scratching going on um the best ones will I I do seem to seem to be seem to be still performing when where they're investing in amenity and um that is is positive but yeah there are some others that are struggling and you may see change of uses with with those kind of those build those buildings.

SPEAKER_02 22:27

That's interesting differentially I guess uh if I'm hearing it right a a flight to quality is happening in in London but your quality area is is broadening in Manchester the area that people will go to.

SPEAKER_03 22:39

Yeah I think I think so. Um and why has that happened perhaps maybe some of those buildings within the more the the the historic centre of the city the sites are more constrained therefore you can have smaller floor plates a lot of the larger occupiers want larger floor plates so that's perhaps why some of those other schemes have performed well I think on the occupancy side but the linking that in I I do I I do think that out of town we've definitely had conversations with occupiers who've moved in because they're struggling with occupancy.

SPEAKER_00 23:07

But if they can be in the city and they can give people a reason to be in probably four days a week maybe not five because um then that's happening I think and and those moves look I think the other pieces there is definitely a a move for um a higher presence in the office we're we're seeing that I think there's no there's no perfect data set to tell you you know there's the TfL tap-ins I I prefer the sort of the press index and the chatting to the blow core lady who serves you coffee in the morning about you know about who's coming through the they know don't they they they know and I think what you know it's encouraging and being a city a city guy you know it's encouraging to see lots of new restaurants opening coffee shops opening you know brands it's a brand called Roslyn you know they're opening multiple multiple in the city and you know it wasn't that long ago talking to one of the main guys there that they were really struggling because they're saying you know we cannot run our business rent is a seven day seven day payment and we're getting three days of of trade I think that three has certainly become four Mondays feel busier just coming out the tube and then the train stations yes Fridays are more difficult. But the the other sort of anecdotal piece is occupiers who signed leases during COVID thinking about how do we shrink our rent bill, how do we shrink our footprint and you know there's a there's an example of Aviva who moved from the Aviva Tower into into a building on Fenchurch Street and um yeah they were very pleased with what happened coming out of COVID but actually now with everyone coming back to the office they do not have enough space in that building and that building is now fully let with other occupiers. So there's anything that comes up within the building there's a space race and then also they're probably having to look around around the periphery and that's just one example there's there's there's many others.

SPEAKER_01 24:55

Well we we we certainly you know we kind of recognise that that that lived experience in the sense that Tuesday to Thursday is as busy as it ever was. Yeah. In fact probably more busy because we're compressed into a smaller space. But so even if we allow for the fact that Friday is even quieter than it used to be and Monday is slightly quieter than it used to be, you still need the same amount of space for Tuesday, Wednesday and Thursday. Exactly. And that's probably the realisation that's coming through you can't if everyone is in for those three days a week you can't save any space. No. So how about how you know longer term I suppose you know you I think about pre-COVID when we used to get on conference calls and there was there was no video, it was just on the call half the time you had no idea who was speaking multiple people try to speak at the same time you know it was it was disastrous you you think you know we don't all love conference calls now but they are a lot better than they used to be. So I guess you know leaping kind of 10-20 years ahead you think if um video conferencing technology has got even better and even more natural and and fluid how do offices kind of adapt to the kind of the changes and and I'm of the view that people will always want to come in and meet in offices. So I'm always of the view that we will need offices but how do they change and how do they adapt to reflect the different kind of requirements?

SPEAKER_03 26:15

I I think we're seeing that materialise in more detailed workplace planning now. So engaging having a steering group that that engages with a a workplace planning team our guys are are doing a lot of that at the moment trying to future proof the space. Yeah so I mean actually our our space in Manchester is a great example we we that was delivered for for 2020 we're due to move in when lockdown happened and we sat there empty for 12 months and then we kind of moved in but I'd love to say it was by purely by design but I think there's a bit of luck there as well but the the space has changed and we've used a lot of the data from the digital technology that we put into the space to justify that so using data to track that and then move and then changing spaces in the office to to suit those needs. So for example the Zoom booths um that we had um are more readily used so we installed some more and we're able to do that because the way we've created the space. So I do think there'll be more kind of creative thinking about how people occupy space and as you said John we've seen that example of occupies that have taken space in 2020 that hasn't been quite quite right. And I think because of that um that lesson I'm sure they'll look more closely about how they move forward because yeah in 10 years time um things will probably will probably be in a very different place. Difficult it's crystal ballgazing but I think there's an element of of of of um kind of strategy that can can be applied for that.

SPEAKER_01 27:40

I think it's interesting John you already kind of touched on having to sign longer leases because of the cost of of you know or because of you know having to pre-let and and the cost of development etc but building in that flexibility of having some flaws so that you can flex in and out of that how does the the flexible office world with a capital F, the kind of serviced office world how does that fit into the whole picture?

SPEAKER_00 28:06

Well it's it's sort of gone through uh it's gone through a almost a mini cycle hasn't it you know I guess we we talked about earlier sort of it was all getting quite overheated in in that world pre-COVID um by its own design it it got hit very hard through COVID because people could just sort of hand their hand their agreements back and and the revenue start stopped flowing. It sort of feels like we've now I'd be interested in your view James but it's it's right sized I think a lot of the centres are you know performing a lot better. I think there are a lot the the operators are a lot more cautious about what they sign themselves up to. You know there's a lot more management agreements which is a bit of a dirty world in you know in on the capital side about how you how you price those and will investors attribute value to you know to those agreements um but I think from the sort of pure operational side they've got a place they've got a place in the world um you know we're seeing in some of the larger buildings where landlords will bring in some of those providers to provide amenity space that they have to provide under the you know under the core leases in in the buildings. So I think it feels like that cycle has sort of weeded out that hyper growth that you know ultimately all all sectors go through at some point but it feels like it's settled down again. Death rates are competitive but again it's it's become more focused around core locations close to stations um I think if you go out to again some of those peripheral markets around around central London where there are where service office providers have got space I think they're they're struggling. And in some cases you know we work have handed keys back or other operators have have have unfortunately had to sort of fold fold leases. So I think it it's gone through a cycle it's definitely more mature but it feels like it has has a place in the in in the world I think it just doesn't always get fully understood or fully valued from the investor side of things.

SPEAKER_02 30:00

We've been talking for a bit but we haven't talked about AI I guess yeah which is incredible we've been talking about this long so I guess as a as a broad question how do you see AI impacting your industries?

SPEAKER_00 30:12

You can go for us John I guess it's sort of multifaceted isn't it in terms of the use of it within our business you know we are we are using it within you know as a as a global business we've we've invested heavily in technology and and and AI and we've got particular particular things at our fingertips which are you know which are real enablers and and you know are you know are making us more productive more efficient if I sort of step out of JL and just look at look at the market yes it's disrupting and it's disrupting at a rapid pace and we sit here two weeks after the sort of market market turmoil that was created by it. Talking to our tenant rep team in the last week around have they seen anything come you know anything in those discussions to indicate that it's going to disrupt heavily I think some occupiers of who are in the market at the moment looking have certainly mentioned in the last couple of weeks around more flexibility might they want the ability to prelit but be able to drop more space before PC or sometime during that lease because you know if AI is going to have a real impact on bodies and use of offices then you know you don't want to be saddled with a long lease on a on the on the building that's that that's too large. But I think it's very early to judge what the impact what the impact is the the developer wants some serious compensation for that for offering up that you know get out clause if you want to and I think everyone's just coming to terms with how can we use it as an enabler but what what it what potential negative impact. But the other positive is we're gonna we're we're starting to see some really strong demand from the AI businesses or businesses that are using AI and technology you know we've seen anthropic we've seen open AI go from very small footprints to take much larger footprints in London.

SPEAKER_03 32:05

So we're definitely going to get some replacement demand coming from that that subsector of technology but what's happening in London um I think we'd like to see some of that action in Manchester as well there's some great schemes up in Manchester aren't there up the Oxford Road Corridor and and uh the universities that where AI is a real focus and you've got some sort of small SMEs there that are growing rapidly and hopefully in the distant future we might see some of that AI action in London happening in Manchester as well.

SPEAKER_00 32:33

Back to offices it was a swear word for a while I think the sort of curiosity sort of started to come in last year you saw the first move as a private equity and we're now starting to see the institutional capital come back into offices and offices of scale you know we saw Nauseas do their first ever deal in the city of nearly 300 million. You know that's a real shot in the arm for the city for London you know it's institutional capital and it's the type of investor that others all recognise and you know the board's got that sort of magnetic effect of they'll pull in others um and actually the UK funds are are looking at London offices again you've got all of the main the main houses looking because they they're looking at the relative value and the relative returns across the sectors they can invest in.

SPEAKER_02 33:20

So the bull market starts here um guys we've been talking for ages I think we could talk for a lot longer yeah conscious that we you guys have got jobs to go and do so that I really appreciate you coming in thank you very much thanks that's been it for another episode of Property Perspectives if you've enjoyed please click like and subscribe