Thames Valley Rising

The recent JLL research on the M4 western corridor office market reveals that office lettings in the first half of 2019 topped 1m sq ft – the third successive year that take-up volume has increased.

A large proportion of the moves agreed to summer 2019, came in west London, which accounted for 433,000 sq ft of deals. The rest of the Thames Valley accounted for 567,000 sq ft of office transactions. Reading was the most active market with 225,000 sq ft of take-up, followed by Basingstoke (130,000 sq ft) and Hammersmith. Virgin Media, Sanofi and Ericsson all moved to Reading in 2018. There were 70 medium/large office moves in the wider Thames corridor in the first 9 months of 2019.

Large deals signed included Sovereign Housing Association taking 65,000 sq ft in Basingstoke for a new HQ, Bottomline Technologies taking 58,000 sq ft in Reading and Li Fung agreeing a deal for a 50,000 sq ft move to White City, London, W12. There were smaller moves involving Gartner in Staines, GTT Communications, Eteach, MyWorkSpot and Orega. The technology, media and telecom (TMT) sector was the most active with 25% of space taken, while the serviced office sector was relatively subdued.

JLL also draw attention to the growing life sciences sector. The White City area has recently attracted office deals from Novartis, Autolus, GammaDelta and Synthace. Metropolis is tracking up to 20 confirmed and potential requirements in this sector.

Across the Thames Valley, Metropolis is speaking to nearly 900 office occupiers that have lease expiries approaching in west London, Surrey, Berkshire and Buckinghamshire in the next two years.

Just over 800,000 sq ft of speculative office space has been completed so far during 2019, but this compares to over 1.7m sq ft in previous years. In the first half of 2019, some 700,000 sq ft of office space went under construction, although much of this was in refurbishments. Mapletree is speculatively developing 400 and 450 Longwater Avenue, Green Park, Reading, both buildings will each comprise 114,000 sq ft. In addition, there are major refurbishments taking place at Arlington Business Park and Thames Valley Park.

Agents say that the shortage of ready-to-occupy new office space is restricting the number of large office moves in the Thames Valley and is leading to a rising number of pre-lets.

 

Thames Valley Demand Up

A recent report from JLL concluded that while office demand in the Thames Valley has increased by 60% during 2014; the volume of actual office deals completed has remained subdued, suggesting that there is likely to be a surge of deals in late 2014 and early 2015.

While some 3m sq ft of office space was let in 2013, only a modest 800,000 sq ft has been let so far in the first three quarters of 2014. Only one deal over 50,000 sq ft was signed VM Ware’s acquisition in Staines (62,000 sq ft). Other major deals included Avnet moving to The Capitol Building, Bracknell (42,500 sq ft), Pernod Ricard taking space at 12 Chiswick Park (42,000 sq ft) and UK TV’s relocation 10 Hammersmith Grove (32,500 sq ft).

JLL say that with over 60% of current requirements in the area coming from US companies, that there is a trend for real estate decisions by US companies to be taken at the end of the year, suggesting a clutch of deals to come. JLL is now forecasting nearly 2m sq ft of office deals in the Thames Valley in the final quarter of the year. Metropolis’ own database of Thames Valley searches reveals about 50 outstanding, including 40 new ones added this year.

There is some 4.8m sq ft of identified office demand in the Thames Valley including large companies searching such as Pepsi, Boden, Ocado and Amadeus. There is also a solid batch of mid size requirements driven by forthcoming lease expiries and expansion plans.

Hammersmith, Chiswick and Bracknell are currently the most popular areas for office deals so far in 2014, under JLL’s definition of Thames Valley. There is around 1.6m sq ft of new office space under construction in the wider area Western corridor area. The area is due to deliver schemes in Chiswick, Slough and Reading, where four schemes are due to deliver nearly 400,000 sq ft, which could prompt some high profile moves to the town.