South East Office Market Rising

Recent Metropolis research into occupier moves in the South East, has revealed 250 relocations over the last 6 months and forms part of a pattern of rising level of market activity, that saw nearly 3.5m sq ft of office space let in the region in 2018.

Occupier confidence returned to the market with a number of high profile lettings being agreed including Sanofi’s 71,000 sq ft letting at Thames Valley Park in Reading, Starbucks acquired 54,000 sq ft at Building 7
Chiswick Park, and healthcare analytics company IQVIA leased 56,000 sq ft at No. 3 Forbury Place, Reading. However, the main volume of mover activity took place in the 5,000-20,000 sq ft bracket, accounting for 70% of transactions in 2018.

Take-up in the South-East office market of 3.5 million sq ft was the highest since 2007. Whilst deal numbers increased by 44% in the second half of 2018. CBRE say that over two thirds (69%) of office take-up occurred in H2. Whilst the overall number of deals increased, there was a surge in larger sized deals. There were 10 deals over 50,000 sq ft, accounting for 873,120 sq ft in 2018, all of which took place
in the second half.  Publicis took 211,000 sq ft at White City in west London and Virgin Media who took 121,000 sq ft at Green Park in Reading. The serviced office sector, which accounted for 10% of take-up in 2017, was increasingly active during 2018 with 19 new centres acquired. These sites totalled 512,000 sq ft and represented 15% of all take-up, with Spaces/Regus the most active operator.

Other large moves included KPMG, Chivas Brothers and McLaren Technology Group finding space.

Looking ahead, CBRE say that lease expiries in excess of 6 million sq ft in the next two years will be a key driver of take-up in 2019. As will a continuation of the recent merger activity. Future requirements could include Starling Bank, Allergan and telecom giant Three. Continued demand for new, high quality office space combined with a finite supply of available Grade A space and only a moderate pipeline of new stock coming through will result in competition for the best office stock, and a potential increase in pre-let activity.

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