M25 Office Market Predictions

Knight Frank has published its Q1 2018 report on the M25 office market.

The report looks at the polarisation of the market into small moves and lettings which is pushing landlords towards the subdivision of buildings into smaller units, alongside the expected emergence of 10-12 large 100,000 sq ft requirements in 2018, many of which will come from technology companies. Knight Frank predicts that many of these searches will end in pre-letting of planned office schemes.

Metropolis is currently tracking some 30 south-east occupiers looking for 25,000 sq ft or more, with a further 20 large companies around the M25, approaching lease events over the next two years. Overall, Metropolis has reported on over 500 office moves in the South East and outer London in the last year.

Knight Frank say the South East office market has a history of occupational demand from the technology sector. In fact, the tech sector has accounted for, on average, 23% of annual office take-up over the last five years and has absorbed some 3.8 million sq ft during that period.

Similarly, occupiers drawn from other sectors have been transformed by the application of new technology to business processes, often fuelling new property requirements.

There were around 60 office deals of over 5,000 sq ft in towns around the M25 in Q1 2018. In west London financial and business services firms account for the largest proportion of take-up over 10 years, 27%. This percentage rises to 29% if considered over the past two years. Most notable is that flexible office providers have quickly gained a strong presence, taking just short of 200,000 sq ft since the beginning of 2016.

Knight Frank conclude that the M25 linked hotspots for office deals over the next year are Brighton, Croydon, Watford and Reading.