Incentives boost M25 office market
Activity among corporate occupiers in the M25 office market is rising, according to Savills. The firm’s latest research into the market for office space to let in the M25 area shows that corporates are increasingly seeking to take advantage of the considerable incentives that landlords are prepared to offer to secure or retain tenants.
Savills says 70 deals in the area were completed during the first seven months of 2010, with an above-average proportion of larger deals among these. It expects this trend to continue for the rest of the year as the attractive terms on offer to occupiers persist.
Savills says take-up for 2010 to the end of July was just over 1.1m sq ft (102,190 sq m) and it predicts that this total will double by the end of the year. The Western corridor of the M25 has continued to dominate demand, accounting for two-thirds of total take-up so far for 2010, which Savills says indicates that M4 towns such as Maidenhead and Reading are the preferred location for occupiers. Pharmaceuticals companies and the technology sector have dominated requirements.
The firm expects the vacancy rate to fall during 2011 and 2012 as there is a lack of new development in the pipeline, particularly in the Western sector of the M25 region. Savills forecasts that upward pressure on rents will return in 2012 as a result. While most investors are seeking prime assets with strong potential for returns, the firm has found that some are now considering speculative refurbishments, given the shortage of Grade A stock in some towns in the area.
