Thames Valley hotspots to start development this year – JLL
JLL says the foundations have been laid for a better than expected year for the market for Thames Valley office space, after a strong start to 2011. Take-up in the first quarter totalled 409,000 sq ft, which was 28% more than in the previous quarter and up 37% year-on-year. The figure is also in line with the five-year average of 407,000 sq ft, the firm notes.
Key deals this quarter included Adobe acquiring 49,800 sq ft of new space at Market House Maidenhead, PRA taking 42,000 sq ft at 500 South Oak Way, Green Park, in Reading, and BP taking 42,000 sq ft at 5 The Square, Stockley Park. JLL notes that, following the earthquakes in Japan, BP decided to re-occupy space it had recently vacated to refocus activities.
Availability was around 10% lower year-on-year at the end of Q1, at 6.9m sq ft. The vacancy rate is currently 11.3%. The shortage of Grade A space is set to spur new developments in some core Thames Valley hot spots this year, says JLL. It notes that the only speculative space currently under construction is BAM’s Chiswick Green (81,500 sq ft), which started on site in Q4 2010. During Q2 2011, Rockpsring and Bellhammer are due to start on site with Toyon (80,130 sq ft) in Uxbridge, it adds, while other development hotspots during 2011 include Wimbledon, Hammersmith, Staines, Richmond and Maidenhead town centre.
JLL says large transactions are making slow progress, but a number of key requirements in this market remain active and have laid a solid basis for demand over the next 12 to 18 months. It forecasts full-year take-up slightly below average at 1.5m sq ft (five-year annual average = 1.6m sq ft). Piers Leigh, partner in JLL’s South East office agency team, says: “In certain locations – predominately the west London Boroughs, where Grade A supply could fall to critical levels – we expect to see a positive impact on rental values as occupiers compete to secure the best space in their preferred location.”
“The secondary and Grade B market continues to cause concern with rental levels and incentives yet to show any sign of decreasing and, in some cases, the incentives periods are continuing to escalate,” he added.
