02 Jan Thames Valley Office deals highest for 10 years
2018 was an amazing year for Page Hardy Harris, particularly the number of Thames Valley office deals, according to Mark Harris who heads up the Maidenhead office.
“There is so much happening in the Thames Valley area. There have been major commercial mixed use projects in towns such as Maidenhead and Slough, especially office/residential conversions. The office market saw a rally in the latter stages of 2017 and this rolled over into 2018.
With Crossrail, the M4 smart motorway and Heathrow Airport extension these factors all add to the attraction of large corporates looking to move out of London due to these better transport links. Just have a look at the plans for Slough regeneration.
Over the last few years there has been a clear trend for occupiers to choose the ‘best in class’ Grade A office accommodation that is close to good public transport and larger conurbations which offer greater amenities to attract employees.
Despite the scarcity of Grade A opportunities in certain key towns this is having a positive knock on effect on rental values with landlords taking the opportunity to refurbish and reposition their buildings to suit modern occupiers needs and this investment is certainly paying dividends.”
Leasing volumes in the South East office market are projected to reach 3.9 million sq ft by year-end, the highest level since 2008, according to the latest research by global property adviser Knight Frank:-
- The 2018 South East market has seen an upturn in out-of-town activity, with take-up in business parks expected to top 2.1 million sq ft, the highest level since 2015.
- Crossrail is accelerating leasing momentum, with close to 1.2 million sq ft of office space being acquired around Crossrail stations, up from 800,00 sq ft in 2017.
- Co-working providers are also contributing to the high levels of leasing activity in the South East market, accounting for 16% of total take-up, an increase from 12% in 2017.
- Investors continue to view the South East office market favourably, with 2018 volumes predicted to hit £2.8 billion, lower than the last three years but 16% above the 10-year average.
- Of those deals completed in 2018, councils have been the dominant purchaser representing 34% of the market. Funds were the dominant sellers this year, representing 47% of the sales in the market. Interestingly, funds have also been more active on the buying side with UK fund investment up by 28% year-on-year.
The figures indicated that the south east was on course for a strong year-end in the South East office market with leasing volumes set to reach a ten-year high, the highest since the financial crash.
A convergence of factors including Crossrail, out-of-town activity, the attractiveness of co-working and the continued growth of TMT are driving the increased volumes, making the projections for 2019 on par with levels last seen in 2002 post the dot-com crash.
Vacancy rates across all South East markets are lower than long-term averages and moving on a downwards trajectory.
We expect this trend to continue into 2019. It is predicted that 32 out of 49 locations in the south east are forecast to see rental uplift, with Slough set to be the main rental growth areas. UK buyers have dominated the market in 2018, accounting for 75% of total volumes, in contrast with 2017 when overseas investors accounted for approximately half of all volumes.
If you would like to speak to one of our team about commercial property in the Thames Valley please contact us here or call us on 01344 311344 or 01628 439006