Thames Valley office take-up surges in Q3
Take-up of office space in the Thames Valley region was exceptional during Q3 at 916,000 sq ft, reaching its highest level since 2001, reports JLL. Demand for the year to date at 1.6m sq ft is already the same as the five-year annual average. The area is expected to be less affected by public-sector cuts than other regions. Total availability in the Thames Valley area slipped slightly during Q3 to 7.8m sq ft, which represents a vacancy rate of 12.8%. Supply levels are still 6% higher than 12 months ago. Grade A supply has continued to reduce steadily during the year.
There were 28 transactions during Q3, returning to the levels of activity seen during H2 2007, with a number of large deals boosting average deal size for the quarter to 32,720 sq ft, JLL notes. Just six deals accounted for 72% of total take-up. Take-up was focused within the Inner M25, with 68% of take-up during the quarter in centres such as Chiswick, Uxbridge, Staines and Heathrow, reinforcing developer confidence in this market area.
King Sturge says locations such as Hammersmith, Staines and Uxbridge are likely to see an increase in headline prime office rents over the medium term for well-located town centre stock, while other locations are likely to see limited movement in rents. The firm notes that a number of large requirements are circulating in the market and demand is still strong for the right product in the investment market in the region. Investors are mainly seeking modern, Grade A stock in west/southwest London and Inner M25 locations. Yields for prime assets in the region are between 6.25% and 6.50%, in line with the 10-year average.
