Thames Valley gives mixed signals

A new report from Lambert Smith Hampton (LSH) on the Thames Valley office market reveals a mixture of trends.  LSH report 126 enquiries (over 5,000 sq ft) in Q1 2017, an increase of 31% compared with the 96 received in the previous quarter, however these are mainly made up of smaller enquiries and LSH say that requirements for units of over 30,000 sq ft are running well below the long term average.

Take-up in Q1 2017 was 425,352 sq ft, a fall of 3 % from the 439,331 sq ft transacted in the previous quarter and 18.6% below Q1 2016’s total of 522,770 sq ft. The total is below the five-year average take-up of 482,169 sq ft and given the drop in large enquiries, take-up may suffer in upcoming quarters. Large deals included: MediaWorks, White City – 70,000 sq ft acquired by Net-a-Porter and Tor, Maidenhead – 40,000 sq ft letting to Rank Group.  Moves underway include Body Shop, Maersk, Macquarie Bank and EDF Energy.

The active sectors in Q1 2017 were professional (31%), technology, media and communications (25%) and pharmaceuticals (14%).  LSH say that 74% of all office take up in Q1 2017 was centred on just five of the 14 centres – Blackwater Valley, Bracknell, Maidenhead, Oxford and Reading. Reading continues to attract some big names and it’s key Business Parks are home to some of the world’s largest high-tech firms including Microsoft, Oracle, Cisco, Symantec, Logica CMG, Huawei, Veritas and more recently, major corporates such as Bayer and Thales.
Metropolis has published 260 stories about the relocation plans of 260 Thames Valley and South East companies in the last three months; including 75 companies searching for office space. In addition, it has reported on the plans of a further 60 companies that are approaching lease decisions.
The outlook for the Thames Valley seems to be for a slightly muted summer 2017, but with the recent rating revaluation and the nearing of the completion of the Elizabeth line, the near-term will see more occupiers relocating further out of Central London along the Thames Valley from early 2018.

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.