Thames Valley Office Market Update

JLL’s just published Western Corridor office market report concludes that the Thames Valley enjoyed a solid start to 2018. Take-up across the region totalled approximately 516,000 sq ft, representing an increase of 31% on the corresponding quarter of 2017.

The first quarter of 2018 was characterised by smaller deals, according to JLL. The the majority of activity (80%) taking place in the 10,000 sq ft to 50,000 sq ft size band. Deal numbers increased by 50% from 24 deals in Q1 2017 to 36 deals in Q1 2018.

Metropolis reported on over 30 planned relocations in the M4 corridor in Q1 2018, such as FM Global taking 57,000 sq ft at Voyager Place in Maidenhead; Black+Decker taking 49,000 sq ft at 270 Bath Road, Slough; Panasonic taking 41,000 sq ft at Maxis office scheme in Bracknell; Fora Space taking 28,000 sq ft at Thames Tower, Reading; JDA Software taking 23,000 sq ft and Riverbed Technology 16,000 sq ft at Maxis office scheme in Bracknell; GiffGaff taking 23,000 sq ft in Uxbridge; Quest Software taking 13,000 sq ft at Arlington Square, Bracknell and MBNL at Thames Tower, Reading.

JLL say that supply of office space is flattening, falling below 10m sq ft and this is expected to moderate further over 2018.  JLL also think that availability will decline in 2019 and 2020 as the number of active speculative development schemes reduce.

James Finnis, head of south east office agency at JLL, said: “The Q1 take-up figures represent a solid start to 2018. The 50% increase in the number of deals in Q1 illustrates growing occupier confidence. Occupiers are focused on the best space and there is widespread evidence of tenants trading up but taking less overall sq ft. Flexibility remains important with occupiers wanting to build in options to either grow or downsize. The addition of serviced or co-working space into multi let buildings is a natural extension of this, providing on site swing space.

Metropolis is currently tracking around 50 office searches of various sizes along the Thames Valley and talking to over 100 occupiers with approaching lease expiries in the area.


Thames Valley growing

Recent research by CBRE concluded that 900,000 sq ft of office deals were signed in the Thames Valley in the last months of 2014. The total for the whole year was 1.7m sq ft of office transactions. The consensus view is that a lot of deals that could have been done, have been delayed. A number of large requirements are now likely to be satisfied in 2015 and agents forecast over 2m sq ft of deals this year.

Deals that did complete in 2014 included: PepsiCo taking 104,870 sq ft at 450 South Oak Way, Green Park, Reading. IMG acquired 72,250 sq ft at Building 6, Chiswick, VM Ware taking 63,000 sq ft in Staines, whilst Gilead Sciences took 51,132 sq ft on Stockley Park, to add to the 47,000 sq ft it occupies in the adjoining building. Philip Morris & Co. took the remaining 34,230 sq ft at 10 Hammersmith Grove, London, W6 and the Highways Agency took 38,000 sq ft in Guildford. Recent 2015 moves listed on Metropolis include Capita in Reading, Oxford Policy Management and Isis Innovation.

Live requirements include Discovery Communications looking for 150,000 sq ft, Universal has a 100,000 sq ft requirement in West London and UCB Pharma is shortlisting for a 200,000 sq ft search in the M4 corridor. In addition, Maersk and Acenden are under offer on offices along the Thames Valley. In total it is calculated that there are over 4m sq ft of live office requirements for towns in the M4 corridor.

There are a number of speculative office schemes under construction including four in Reading, together with schemes at Chiswick Park, Hammersmith, Farnborough, Slough and Leatherhead.

Future growth is expected in advance of the completion of Crossrail in 2018, especially Slough and Maidenhead which will have stations, but also centres such as Reading, Bracknell and Basingstoke, as businesses position themselves to appeal to high calibre staff. In addition, with central London office rents rising faster than outside London the Thames Valley is starting to see some cost-driven relocations.