Thames Valley offices recovering – LSH
In its annual Thames Valley Office Market report, Lambert Smith Hampton says the region is recovering from its 2009 low, with office take-up in 2010 totalling nearly 2m sq ft and this year continuing in a similarly positive tone, with 700,000 sq ft of take-up in the first quarter alone.
Nick Coote, head of LSH’s Thames Valley offices, says: “This is not only a marked improvement from the 2009 low, but an indication of market confidence returning to 2008 levels when 2.7m sq ft of take-up was recorded. These demand trends over the last three years suggest that the recovery curve is not the ‘double dip’ that the industry feared, but instead the steady volume of take-up implies a more classical recovery.”
Total office stock in the Thames Valley area is just over 64m sq ft, with current availability at 18% or 11.3m sq ft. LSH notes that office supply has remained relatively flat over the past year, with limited appetite for speculative development. Landlords are being challenged to refurbish existing stock or find alternative uses for their properties. The dominant drivers for occupiers are lease breaks and ends – companies are seeking to take advantage of these lease events to acquire space with larger floor plates, closer proximity to transport hubs and better environmental credentials, the firm notes.
“Over the next 12 months, as increased demand continues, we anticipate that market supply issues (where there are shortages of quality stock) will become exposed in some Thames Valley centres. This may see increases in rents, and potential frustration from occupiers seeking quality solutions in specific locations. The challenge for landlords will be providing the quality product demanded by occupiers, in the right locations, and restoring value to newly vacated stock,” LSH says.
